• 21 Oct

    Late Payment Help For UK Businesses

    Late payments remain one of the biggest causes of cash flow pressure for UK companies. Many businesses find themselves waiting weeks or even months beyond agreed terms before invoices are settled. This post explains how to manage late payments, reduce their impact, and access finance that bridges the gap.

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    How to get help with late payments from customers.

    Why Late Payments Are So Common

    Despite most customers intending to pay on time, delays are widespread. In our recent survey of UK business owners, 84% said at least some of their invoices were paid late. A small but serious minority reported waiting 60 days or more beyond terms.

    Late payments often occur because larger companies use supplier credit as informal finance, or because of administrative delays and cash flow issues further up the chain. Whatever the cause, the result is the same: unpredictable income and growing pressure on working capital.

    The Impact on Businesses

    The effects of late payments go far beyond inconvenience. Many respondents to our research said it creates ongoing cash flow stress, forces them to delay paying suppliers or staff, and damages customer relationships.

    Some have even had to inject personal funds or use expensive credit cards just to keep operations running.

    If your business is regularly affected by overdue invoices, it’s important to act early. Allowing delays to continue unchecked can restrict growth and, in extreme cases, threaten the survival of an otherwise successful company.

    Practical Steps to Reduce Late Payments

    Before considering finance, several simple actions can reduce payment delays:

    • Set clear payment terms on all invoices and contracts.
    • Invoice promptly and include full details to avoid queries.
    • Send polite reminders a few days before due dates.
    • Offer easy payment options, such as bank transfer details, on every invoice.
    • Apply late payment interest under the Late Payment of Commercial Debts Act where appropriate.

    Even with sound systems in place, some customers will still pay late. That’s where funding can make a real difference.

    See our Guide To Credit Control for more help with this.

    Using Finance to Bridge the Gap

    When late payments cause cash flow problems, invoice finance can release the money tied up in unpaid invoices. Instead of waiting 30, 60 or 90 days, you receive most of the invoice value immediately and the balance when your customer pays.

    There are a few main options:

    • Invoice Finance - An umbrella term for flexible facilities providing ongoing funding against unpaid invoices.
    • Factoring - Funding against invoices with credit control services, so your funder helps chase payments on your behalf.
    • Invoice Discounting - A funding-only option where you retain control of collections.
    • Other Cash Flow Finance Options - Broader funding solutions to improve liquidity and avoid relying on savings or overdrafts.

    Each option has its own advantages, and a broker can help you find a provider suited to your industry, turnover, and customer base.

    Free Cash Flow Health Check & Fix Kit

    If you’re not sure how badly late payments are affecting your business, you can use our free Cash Flow Health Check & Fix Kit.

    It helps identify weak points in your cash flow and offers practical ways to strengthen it.

    Get Personal Help with Late Payments

    If you’re struggling with late-paying customers, we can help you explore finance options that release the cash you’ve already earned. Our service is free to use, and we can find providers who are happy to consider your specific circumstances.

    Use our quote search form or call us to discuss how to improve your cash flow and take control of your payment cycle on 03330 113622.

    Late Payment FAQ

    These are the answers to Frequently Asked Questions about Late Payment Help.

    What is a late payment?

    A late payment is when a customer pays an invoice after the agreed credit terms, for example, beyond 30 days (if that was the trade credit period agreed). Even a few days’ delay can affect business cash flow.

    How common are late payments in the UK?

    Very common. Most UK businesses experience at least some late payments, with many waiting more than two weeks beyond terms to be paid. The UK Government offers a free service where you can check how long large companies take to pay.

    Why do businesses pay invoices late?

    Customers often delay payment due to their own cash flow problems, internal approval processes, or using supplier credit as informal finance.

    How long do businesses typically wait to get paid?

    The average wait for payment was 57 days, according to a survey by Begbies Traynor Group. Many invoices are settled 1 to 14 days late, but some firms report waiting 30, 60, or even 90 days after the due date, according to our own research.

    What is the biggest impact of late payments on small businesses?

    According to our research, the biggest impact of late payments, beyond just minor inconvenience, was "cash flow pressure", which was experienced by 30% of respondents. Late payments cause cash flow pressure, stress, and can stop a business from paying suppliers, staff or investing in growth.

    What can I do if a customer keeps paying late?

    Remind them politely before the due date, enforce clear payment terms, and consider using invoice finance to avoid the wait for funds.

    Can I charge interest on late payments?

    Yes. Under the Late Payment of Commercial Debts (Interest) Act 1998, you can charge statutory interest at 8% above the Bank of England base rate, plus compensation.

    How do I calculate late payment interest?

    Multiply the amount owed by the statutory rate and the number of days late, then divide by 365. The Small Business Commissioner provides a free online statutory interest calculator to work out the amount due.

    Should I actually charge interest or just warn customers?

    Often, a polite reminder that interest can be applied is enough to encourage prompt payment without damaging relationships. However, charging interest is now a statutory right.

    What is a fair payment term for business customers?

    The most common standard terms in the UK are 30 days from invoice date. However, some industries use 45, 60 days or even more. Make terms clear in contracts to avoid disputes.

    How can I reduce late payments?

    Invoice immediately, make payment easy, follow up regularly, and check customers’ creditworthiness before offering terms.

    What is invoice finance, and how can it help?

    Invoice finance releases cash from unpaid invoices, giving you access to most of their value immediately. This removes the wait caused by late payers.

    What’s the difference between factoring and invoice discounting?

    Factoring includes credit control in addition to finance against unpaid invoices, so your provider collects payments for you.

    Can invoice finance help if my customers are very slow payers?

    Yes. Funders can advance money based on your invoices to credit worthy customers, even if your customers take 60–90 days to pay. A typical example could be invoices to local authorities that can take time to be paid, but the credit standing of the customer is not the issue.

    What happens if a customer doesn’t pay at all?

    Some facilities can include bad debt protection, which can cover you if a debtor fails to pay due to insolvency.

    How quickly can I get funding from unpaid invoices?

    Some providers release funds within 24 hours of approval, making it one of the fastest ways to improve cash flow.

    Can I get help even if I only have a few late-paying customers?

    Yes. Selective invoice finance (or spot factoring) lets you fund individual invoices rather than your whole sales ledger.

    What are the main alternatives to invoice finance?

    Overdrafts, short-term loans, or using personal money. However, these can be more expensive or difficult to access compared with invoice finance.

    How can I check my cash flow health?

    You can use our free Cash Flow Health Check & Fix Kit to identify weak points and get practical fixes.

    What should I do if late payments are threatening my business?

    Get support early. A finance broker can help you find suitable funding before cash flow becomes critical.

    Where can I get free help with late payments?

    You can contact FundInvoice LLP, a UK-based finance brokerage offering free support and introductions to invoice finance providers that can help improve your cash flow. Contact us on 03330 113622.

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    Source: FundInvoice LLP - Late Payment & Cash Flow Impact Survey September 2025.

    By Glenn Blackman

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Examples of funders we work with:

seneca
closebrothersinvoicefinance
giant finance
leumi abl
berkeley
ifg