Late payment ‘hidden hours’ show receivables pressure beyond cash flow

Late payment is creating a hidden operational burden for UK small businesses, with owners spending an average of 86 hours a year chasing unpaid invoices, according to research cited by Sage.

The figure comes from research commissioned by the Department for Business and Trade and conducted by London Economics. Sage said the time spent chasing overdue invoices forms part of a wider late payment problem that affects cash flow, growth planning and day-to-day business stability.

The research also estimates that 133 million staff hours are lost across the economy each year to payment-chasing activity, while outstanding late payments total £26bn at any given time.

The finding is relevant for receivables finance because late payment is often discussed only as a liquidity issue. In practice, delayed invoices also create administrative work, forecasting uncertainty and commercial risk for suppliers.

For SMEs, the pressure is particularly direct. When a large customer pays late, the supplier still has payroll, tax, rent and its own supplier invoices to meet. That can increase reliance on invoice finance, overdrafts, short-term loans or informal payment stretching.

Sage’s analysis also links the issue to the government’s proposed late payment reforms, including a 60-day payment cap for large companies working with small suppliers, mandatory interest on overdue invoices and stronger powers for the Small Business Commissioner.

The commercial issue for receivables finance providers is whether regulation changes behaviour quickly enough. If payment discipline improves, suppliers may gain more predictable cash flow. If it does not, invoice finance and receivables-backed lending will remain critical tools for managing the gap between work delivered and cash received.

The hidden-hours data also matters for accountants and advisers. Payment delays force businesses to spend time monitoring invoices, updating forecasts and managing client conversations that do not generate new revenue.