Large companies are paying suppliers faster than they were when payment practice reporting began, but late payment is still a live cash flow risk for small businesses, according to new figures highlighted by the Office of the Small Business Commissioner.
The latest official statistics show that, in 2025, large businesses paid 15 percent of invoices late. That is down from 25 percent in 2018, a 10 percentage point fall over the period covered by the reporting regime. The time large businesses take to pay suppliers has also decreased.
For small firms, the improvement is welcome but not a reason to relax credit control. One in seven invoices being paid late by large businesses is still enough to strain working capital, delay hiring, push overdraft use higher or force owners to spend time chasing money instead of serving customers.
What has changed
The figures come from data reported under the Reporting on Payment Practices and Performance Regulations 2017. Large UK businesses are required to report twice a year on how they pay suppliers, including payment terms, average payment times and the share of invoices paid late.
The Small Business Commissioner said the data points to progress since 2018, with payment times falling and late payment rates moving down. London has consistently shown shorter payment times and relatively low proportions of late invoices compared with other regions and nations.
The manufacturing sector remains a concern. It has consistently reported the longest payment times and the highest proportions of invoices paid late compared with other sectors across the UK. That matters because many manufacturing suppliers are smaller firms carrying material, labour and energy costs long before an invoice is settled.
The update also lands as the government is pursuing the Commercial Payments (Late Payments) Bill, which ministers have described as a tougher regime for payment discipline. The direction of travel is clear: late payment is being treated less as a private admin problem and more as a drag on business investment and growth.
Why it matters to SMEs
Payment terms are not just paperwork. A business that waits an extra 20, 40 or 60 days for a large customer to settle can quickly find itself funding someone else’s balance sheet. That can mean slower stock purchases, delayed wages for owners, pressure on tax savings, or reduced ability to take on new work.
For many SMEs, the worst cases are not always the invoices that are never paid. The bigger everyday problem is uncertainty: not knowing whether a customer will pay on the agreed date, whether a remittance is really on its way, or whether an accounts team will raise a query only after the due date has passed.
BritishSME has previously covered how late payments continue to squeeze UK SMEs. The new figures suggest some progress, but they also underline why small suppliers should keep payment performance visible when dealing with bigger customers.
What small businesses should check now
Small suppliers should start by reviewing their own invoice data. Look at the customers that pay later than agreed, the average delay after due date, and how often queries are raised after the invoice has already been issued. Patterns matter more than one-off excuses.
It is also worth checking whether larger customers publish payment practice reports. The GOV.UK payment practices service lets suppliers see reported payment terms and performance. That can be useful before agreeing a new contract, extending credit, or deciding whether a customer needs tighter payment terms.
Businesses should also make sure their own invoice process is not giving customers easy reasons to delay. Purchase order numbers, delivery references, agreed rates, VAT details and named contacts should be correct before the invoice goes out. Clear records make it easier to challenge slow payment quickly.
Where a customer is important but regularly slow, owners may want to set firmer escalation points: a reminder before the due date, a same-day chase when payment is missed, and a decision on when to pause further work or seek support. The Small Business Commissioner also offers guidance for firms dealing with unpaid invoices.
The practical takeaway
The headline is positive: large business payment performance appears to be improving. The practical lesson for SMEs is more cautious. Late payment has not gone away, and the firms most exposed are often those with thin cash buffers, high upfront costs or a small number of large customers.
Small businesses should use the new data as a prompt to tighten credit control, review customer payment behaviour, and put clearer processes around chasing overdue invoices. If the Late Payments Bill strengthens the regime, good internal records will also make it easier for suppliers to use any new protections effectively.
Sources
Small Business Commissioner: Payment Times Are Improving As New Legislation Dawns
