Late Payments and Rising Costs Squeeze UK Small Firms
A new barometer from Enterprise Nation reveals that 42% of UK small businesses faced late payments in the past year, leaving £26 billion stuck in overdue invoices. Petrol and diesel prices are climbing, while shop price inflation has hit a two-year high. Additionally, three-quarters of small-business owners pay themselves less than £20,000 annually.
The barometer also shows that late payment now affects a far broader base of firms, with the share of businesses hit rising from a 24–34% range in 2023–24 to 42% today. Among employers, the rate has more than doubled since summer 2024. Meanwhile, owners are absorbing the strain personally: 76% take home under £20,000 a year, and only 41% expect growth in the next year. Funding appetite has dropped to a record low of 40%, with many seeking smaller sums under £10,000 and credit-card reliance nearly doubling.
Persistent late payments and rising fuel and shop-price inflation could deepen cashflow crises for small firms, forcing owners to defer investment or cut their own pay further. With expansion confidence weak and external funding appetite at a record low, these businesses may struggle to create jobs or absorb cost shocks, potentially affecting local economies and supply chains. The personal financial toll on owners could also reduce entrepreneurial resilience, though the full impact depends on whether payment reforms and Budget measures ease the burden.