UK SME late payments rise to 63%, government survey finds

Late payments became a problem for 63% of UK small and medium-sized employers offering credit to customers in 2025, an increase of six percentage points from the previous year, according to new government research published on 15 October.

The findings, from the Longitudinal Small Business Survey 2025, provide fresh official evidence of the pressure on businesses that supply goods or services before receiving payment. The proportion reporting late-payment difficulties rose even as fewer businesses offered customers trade credit.

Among SMEs employing between one and 249 people, 44% provided trade credit in 2025, down from 47% in both 2024 and 2023. Of those extending credit, 63% regarded late payment as a problem, equivalent to 28% of all SME employers surveyed.

The exposure was particularly significant in manufacturing. Four out of five manufacturing SMEs offered trade credit, compared with 58% of transport and storage businesses and 50% of small firms employing between 10 and 49 people.

Late payment was most frequently identified as a problem by credit-providing businesses in administration, where the proportion reached 75%. Among firms extending credit, the figure was 65% in England, compared with 59% in Scotland and Wales and 50% in Northern Ireland.

The results point to an important distinction for working-capital providers. Trade credit allows suppliers to win orders and maintain commercial relationships, but delayed receipts can leave them funding wages, materials, inventory and other operating costs for longer than anticipated.

That creates a potential role for invoice discounting, factoring and receivables-backed lending, although the suitability of each product depends on debtor quality, invoice eligibility, pricing and the supplier’s circumstances.

The survey also found that 70% of SME employers used some form of external finance in 2025, compared with 72% in 2024. Factoring or invoice discounting was used most frequently in manufacturing, at 8%, followed by transport and storage and administration, both at 6%.

These are findings about business conditions during the 2025 survey period, rather than a direct measurement of payment performance in October 2026. Nevertheless, the rise in reported difficulties shows how customers’ payment behaviour can intensify liquidity pressure even without an equivalent increase in borrowing.

For receivables financiers, the figures reinforce the importance of distinguishing businesses with healthy sales from those able to convert those sales into predictable cash.