UK small businesses still owed £70bn in late payments, says Hiscox report

Small businesses across the UK are still waiting on an estimated £70.4 billion in unpaid invoices, according to new research from specialist insurer Hiscox.

More than a year after the government introduced the Fair Payment Code, late payment remains a constant problem for many sole traders and small firms.

The headline figures are striking:

• Small businesses are owed £12,357 on average in late payments each year
• 23% of all payments arrive late
• Businesses chase 14 late payments a year on average

Hiscox surveyed 1,000 small business owners and sole traders via Censuswide for its first Late Payments Report.

With around 5.7 million small businesses operating in the UK, the insurer estimates that outstanding payments could total £70.4 billion nationwide.

You can read the full report here: Hiscox small business late payments report.

The waiting time adds up

On average, a late payment takes three weeks from the original due date before it is settled.

Chasing 14 late invoices a year might not sound dramatic on paper, but the cumulative stress adds up over time. Across all outstanding invoices, businesses spend the equivalent of 331 days waiting over the course of a year.

For 17% of small businesses, average payments are delayed by more than a month after the due date.

And, of course, some invoices are never paid at all.

One business owner told Hiscox:

There’s always the fear that someone won’t pay up. I’ve had it only twice in nine years where an invoice hasn’t been paid at all. The first time it happened, they were my only client, and it meant I had no money for two months.

Working for yourself is a joy. It’s the best. But when people don’t pay up, it not only throws your finances into issues, but it also affects your confidence and piles on stress. It means you always need money set aside for worst-case scenarios.”

That last point will resonate with many sole traders.

If you rely on a small number of clients, a single unpaid invoice can even put the viability of the business at risk.

Late payments rise according to business size

The proportion of late payments increases as businesses grow:

• 19% of payments to sole traders are late
• 25% of payments to businesses with 10 to 49 employees are late

Some sectors see a higher volume of unpaid invoices than others. According to Hiscox, the industries chasing the most late payments on average each year are:

• IT and Telecoms: 18
• Finance: 17
• Healthcare: 16
• Retail, Catering and Leisure: 15
• Legal: 14

For IT and telecoms freelancers, that equates to more than one late invoice per month on average. In project-based work, where invoices can be for substantial sums, delays create real stress.

Reform seems not to have changed

The research comes more than a year after the Fair Payment Code was introduced to encourage better payment practices.

ByteStart recently covered the planned changes in our article on the 2026 late payment crackdown.

Late payments are not simply an administrative problem. They directly affect cash flow, payroll, investment decisions, and even the ability to meet tax deadlines.

Our guide to self assessment explains why you should always put money aside to settle your tax liabilities.

What to do if you suffer from late payment problems

The insurer listed some of the most common tactics businesses use to deal with late payment issues:

• Following up with a phone call (37%)
• Building strong client relationships (36%)
• Being clear with payment terms (36%)

Nick Thornhill, Direct and Partnerships Director at Hiscox, outlined five steps businesses can take to reduce the risk and impact of late payments:

1. Send invoices promptly once work is complete
2. Send polite reminders where necessary
3. Break large projects into staged or milestone payments
4. Decide in advance how you will handle repeat late payers
5. Consider insurance as part of a wider safety net

Some useful ByteStart guides

Read our guide to payment terms and invoicing clients for some inspiration.

You can also download some sole trader invoice templates.

If you are already dealing with overdue debts, read our guide to what happens if a client does not pay, which outlines the formal options available to you, including charging statutory interest and using a debt recovery service.