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Late payments remain a critical issue for small businesses, affecting cash flow, resources, and business growth. GoCardless, a global leader in direct bank payment solutions for business, commissioned the Federation of Small Businesses (FSB) to survey over 2,000 small business owners to assess the scale of the problem, its impact, and the steps businesses are taking to mitigate late payments.
Key findings
- Widespread late payment issues: 50% of small business owners see late payments as an inevitable part of doing business.
- Financial strain: 60% of respondents say late payments are holding back their business growth, while 38% have relied more on credit in the past year to manage cash flow.
- Significant time costs: 63% of businesses report spending time chasing overdue payments, with costs estimated at up to £5,200 per year in lost time and resources.
- Control challenges: 32% of business owners feel they have little to no control over managing late payments, particularly when dealing with large customers.
- Mitigation efforts: While many businesses send payment reminders or enforce stricter terms, a third have no proactive measures in place, and 5% regularly forfeit payments due to the cost of chasing them.
- Adoption of automated payments: Despite evidence that automated payments can reduce late payments, 80% of small businesses still rely on manual bank transfers.
The findings highlight the urgent need for better payment practices and solutions to ease the burden on small businesses. Implementing stricter payment terms, charging late fees, and adopting automated payment methods are among the strategies businesses are considering.
For further information and insights, download the full report below.