UK businesses ‘struggling to survive’ due to late invoice payments

UK businesses are facing a growing financial crisis as late invoice payments push many to the brink of insolvency.

According to a recent survey by the Federation of Small Businesses (FSB), nearly one in three small firms have seen their cash flow severely disrupted by overdue payments from clients, with some waiting up to 90 days for invoices to be settled.

This chronic issue is particularly impacting sectors like construction, retail, and hospitality, where businesses often rely on a steady cash flow to cover operational costs. As late payments accumulate, many companies are being forced to take drastic measures such as delaying staff wages, cutting back on supplies, or even considering layoffs. The FSB warns that the problem is worsening, exacerbated by inflation and ongoing economic uncertainty.

Despite the introduction of late payment legislation in recent years, enforcement remains weak, leaving many businesses with little recourse but to accept delayed payments. Industry leaders are calling for stricter regulations and better access to dispute resolution to help small businesses survive.

“Late payments are suffocating small businesses,” said FSB Chair Mike Cherry. “Without urgent action, we risk losing a generation of entrepreneurs.”