Late payments aren’t just frustrating for UK businesses – they are a serious threat to survival. Late payments are forcing an estimated 14,000 UK businesses to close every year — equivalent to 38 closures every single day — as cash-strapped firms struggle to survive unpaid invoices. New analysis from Funding Circle reveals that combining UK business data with research from the Small Business Commissioner shows which industries and locations are hit the hardest.
Construction is the sector most exposed, with over 2,100 firms estimated to have closed in 2024 due to delayed payments, driven by long payment chains and thin margins. Professional services, wholesale and retail, and administrative sectors also face significant risks.
The impact is uneven across regions: London leads with more than 3,000 late-payment-related closures, followed by the South East (1,950) and North West (1,500). Micro and small businesses, already under pressure from rising costs and tighter margins, are disproportionately affected, losing an average of 86 hours a year chasing payments – a national productivity drain of 133 million hours.
28% of firms are affected each year, impacting more than 1.5 million businesses nationwide.
Collectively, UK businesses are owed around £26 billion in overdue payments at any given time. For the average affected business, this means waiting on £17,000 in unpaid invoices – cash that could otherwise be used to pay staff, invest in growth, or keep day-to-day operations running smoothly.
Research finds that micro and small businesses bear the greatest burden. Late payments account for 4.61% of annual turnover for micro businesses and 1.47% for small businesses. While the absolute value of late payments is typically lower for smaller firms, a far greater proportion of their turnover is tied up in unpaid invoices.
Construction has emerged as the sector most at risk
Construction has emerged as the sector most at risk, with over 2,100 firms estimated to have closed in 2024 due to delayed payments, driven by long payment chains and thin margins. Professional and technical services, wholesale and retail, and administrative and support services also feature heavily.
| Sector | Businesses (Total) | Estimated closures due to late payments in 2024 |
| Construction | 870,000 | 2,140 |
| Professional, scientific & technical | 755,000 | 1,855 |
| Wholesale & retail | 559,000 | 1,370 |
| Admin & support services | 495,000 | 1,215 |
| Other services | 367,000 | 900 |
| Health | 356,000 | 875 |
| IT & communication | 338,000 | 830 |
| Transport & storage | 313,000 | 770 |
| Education | 299,000 | 735 |
| Arts, entertainment & recreation | 280,000 | 690 |
| Manufacturing | 247,000 | 605 |
| Agriculture | 212,000 | 520 |
| Hospitality | 148,000 | 365 |
| Property | 143,000 | 350 |
| Finance & insurance | 86,000 | 210 |
| Mining & utilities | 31,000 | 75 |
| Total | 5,700,000 | 14,000 |
Productivity drain: 133 million hours lost chasing invoices
Late payments don’t just restrict cash flow – they also drain productivity. UK businesses lose an estimated 133 million staff hours each year chasing overdue invoices, with affected firms spending an average of 86 hours annually pursuing money they are already owed.
That lost time translates into almost £7 billion (The average labour cost estimate is £16.92 per hour) a year in direct costs to businesses, factoring in staff time, legal fees, debt collection, and emergency financing used to plug cashflow gaps.
Late payments shut down 38 UK businesses a day, putting 40,000 jobs at risk
Late payments are forcing an estimated 14,000 UK businesses to close every year — equivalent to 38 closures every single day – as cash-strapped firms struggle to survive unpaid invoices. Businesses struggling with late payments reportedly face higher closure rates than similar firms without such issues. In 2024, around 280,000 businesses closed in the UK, meaning roughly 1 in 20 of these closures were likely caused directly by late payments.
London recorded the highest number of closures tied to late payments, with more than 3,000 businesses estimated to have failed as a result, followed by the South East (1,950), North West (1,500) and East of England (1,350). These regions account for a disproportionate share of late-payment-driven business failures, underscoring how deeply the issue is embedded in the UK’s commercial landscape.
| Region | Business deaths in 2024 (thousands) | Estimated closures due to late payments |
| London | 61 | 3,050 |
| Yorkshire and the Humber | 20 | 1,000 |
| North West | 30 | 1,500 |
| North East | 8 | 400 |
| West Midlands | 24 | 1,200 |
| Wales | 10 | 500 |
| East Midlands | 19 | 950 |
| East of England | 27 | 1,350 |
| Scotland | 16 | 800 |
| South West | 21 | 1,050 |
| South East | 39 | 1,950 |
| Northern Ireland | 5 | 250 |
| UK total | 280 | 14,000 |
Why fixing payment culture matters now
With 84% of late payments coming from UK customers, the research highlights a clear opportunity for economic improvement through better payment practices. The analysis suggests that reducing poor payment behaviour by just 10% could deliver nearly £1 billion in economic benefits every year through fewer closures, higher investment and improved productivity.
For business owners, late payments aren’t just a temporary cash issue – they increase risk, reduce resilience, and limit opportunity. Every hour spent chasing invoices is time not spent growing the business, hiring staff, or improving products and services. Payment uncertainty makes planning harder and undermines confidence in future investment.