UK late payments continue to weigh on SME growth

By Milan Rojan

Late payments have continued to place significant pressure on UK small and medium-sized enterprises (SMEs), with industry leaders warning that poor payment practices are affecting business growth, investment and employment despite renewed government efforts to tackle the issue.

The warning has followed the introduction of the UK Government’s Small Business Protections Bill in May, described by ministers as the largest crackdown on late payments in more than 25 years. According to figures released alongside the legislation, late payments have closed 38 UK businesses every day and cost the economy an estimated $15 billion annually.

While the new measures aim to improve payment practices, many organisations have continued to treat delayed payments as an administrative issue rather than a broader business risk.

Lynne Darcey Quigley, CEO and Founder of Darcey Quigley & Co, said: “The fact the Government has felt compelled to introduce the largest crackdown on late payments in more than 25 years demonstrates just how serious this issue has become. Late payment isn’t simply frustrating for SMEs, it affects hiring decisions, investment plans and, in some cases, whether a business survives at all.”

According to the company, many SMEs have remained financially constrained despite generating sales and securing new contracts, as payments are often received weeks or months after agreed terms. Delayed settlements have reduced working capital, affecting recruitment, supplier payments and investment in technology and expansion.

Quigley added that smaller businesses have increasingly acted as “unwilling lenders” to larger organisations by absorbing the financial impact of delayed payments, limiting their ability to pursue growth opportunities.

The company has argued that payment discipline should be viewed as a strategic business priority rather than solely a finance function. Strong cash flow, it said, remains critical to supporting operational resilience, investment and long-term sustainability, particularly during a period of economic uncertainty and rising operating costs.

The comments have highlighted the growing role of payment practices in the wider financial ecosystem, with delayed settlements continuing to affect liquidity across supply chains. As businesses increasingly adopt digital payment solutions and automated finance platforms, improving payment culture is expected to remain a key focus for policymakers, financial institutions and technology providers seeking to strengthen SME resilience and support economic growth.