Slow Payers: The Hidden Costs Draining UK Businesses

Giving credit to customers remains a cornerstone of business-to-business (B2B) trade in the UK. But in today’s high-interest, cost-constrained economy, slow payers are more than just an annoyance – they’re a serious drag on business performance. With cash-flow tighter than ever and insolvencies rising, recognising and tackling the hidden costs of late payment has never been more important.

1. The Cost of Late Payment

Recent data make clear the scale of the challenge facing UK small and medium-sized enterprises (SMEs):

  • 72 % of SMEs (over 3.6 million businesses) have outstanding late payments from customers.
  • The average value of outstanding late payments per SME is around £96,772, up 41 % since end-2023
  • The total value of late payments to SMEs is estimated at £348 billion.
  • Small businesses (0-9 employees) alone were owed £112.2 billion in late invoices in Q3 2024.
  • Nearly half (49 %) of all invoices sent in the UK were paid late in the 12 months to June 2024 (up from 43 %).
  • Between April and June 2024, small businesses waited an average of 29.1 days to be paid, and on average payments were 7.3 days late.

These figures underline a stark reality: late payment is no longer a periodic problem – it’s a systemic risk to many businesses.

2. Why “Slow” is Just as Dangerous as “Late”

It may feel like you’re getting paid eventually – but the true cost of delayed payment is far greater than bad-debts write-offs.

Imagine you run a business with £1 million turnover, 10 % profit margin. You typically have £100,000 tied up in overdue invoices. In today’s climate, that might cost you 12 % or more in interest and lost opportunity – i.e. around £12,000 per year. To recover that through additional sales you’d need to generate another £120,000 of turnover – nearly six weeks of operations.

The takeaway: even if the debt is paid eventually, the cost of having that money stuck in your customer’s bank account is huge – in terms of interest, lost investment, discounts you cannot take, and managerial distraction.

3. The Hidden Ripple Effects

Slow and late payments hit businesses in multiple often invisible ways:

  • Time cost: Research shows SMEs spend on average 13 hours chasing each late invoice – up from nine hours.
  • Staffing cost: You may need to allocate or hire resource just to manage the debt-chasing function.
  • Opportunity cost: Want to pay a supplier early to get discount? Want to buy in bulk to reduce cost? Delayed cashflow often means you can’t.
  • Distraction & stress: Rather than focusing on growth, you’re negotiating delays, chasing payments and managing risk.
  • Chain reaction: The Department for Business and Trade found that 40 % of late payment drivers stem from customers themselves being paid late; 24 % from administrative errors.

4. Why the Culture Persists

Despite legislation such as the Late Payment of Commercial Debts (Interest) Act 1998, many businesses still accept late payment as “just how trade works”. There are several reasons:

  • They don’t want to sour customer relationships which they rely on.
  • They underestimate the true cost of slow payers and focus only on write-offs rather than cash tied up.
  • In tighter economic times, some businesses deliberately stretch payment terms to manage their own cashflow. The government research found 18 % of businesses admitted to that.

5. How CPA Helps Break the Cycle

At the Credit Protection Association (CPA), we help members tackle the real cost of slow payers — not just the write-offs. Our services include:

  • Creditcare Reports – Get up-to-date credit ratings and limits, detailed info on potential customers, so you can set sensible credit policies.
  • Monitoring Service – Be alerted to significant changes in your customer’s status before they become a risk.
  • Overdue Account Recovery – We act on your behalf to chase late payments while you stay front-of-mind with your customer. Over 80 % of accounts referred to us recover without needing escalation.
  • Collections Department – For the minority of debts needing escalation, we handle collection on a no-win, no-fee basis or via debt purchase on a recourse basis.
  • Fixed Annual Subscription – All the above (and other complimentary services such as address-verification) are included in one fixed annual fee — unlike other firms where costs rise with debt value.
  • Have CPA in your corner – As members you can have our artwork on your emails and invoices – it’s surprising how the simple move of telling your customers you are members of the Credit Protection Association can improve the payment behaviour.

6. Conclusion: Don’t Let Slow Payers Drain Your Business

Slow payers cost you more than bad debts ever will. They drain your cashflow, distract your focus, block growth and threaten your margin. In the current high-interest, uncertain environment, the cost of having money stuck in your customer’s pocket is simply too high to ignore.

By working proactively – using good data, monitoring risk and acting early – you can reduce the burden of slow payers, protect your business and free your mind to focus on growth instead of chasing cash.

Call 020 8846 0000 or email nsm@cpa.co.uk today to find out how CPA can help turn your late payers into prompt payers.

The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections.