Late payment continues to threaten SME growth

Late payment remains one of the biggest barriers to SME growth in the UK, with delayed payments continuing to undermine investment, recruitment and business resilience despite fresh Government action to tackle the problem.

The issue has been thrust back into the spotlight following the introduction of the Government’s Small Business Protections Bill in May, described by ministers as the biggest crackdown on late payments in more than 25 years. Figures released alongside the legislation show that late payments force 38 UK businesses to close every day and cost the economy an estimated £11 billion annually.

“The fact the Government has felt compelled to introduce the largest crackdown on late payments in more than 25 years demonstrates just how serious this issue has become,” she said. “Late payment isn’t simply frustrating for SMEs, it affects hiring decisions, investment plans and, in some cases, whether a business survives at all.”

Quigley said that while businesses often focus on driving sales and securing new contracts, many continue to face financial pressure because payments are not arriving within agreed terms.

“Too many organisations still see payment delays as an accounts issue rather than a business issue,” she said. “Businesses can be performing well, generating strong sales and winning new contracts, yet still find themselves under significant financial pressure because cash isn’t arriving when it’s supposed to. The reality is that cash flow drives every major decision a company makes, from hiring and expansion to investment and innovation.”

According to Darcey Quigley & Co, delayed payments have consequences far beyond finance departments, affecting recruitment plans, investment decisions, supplier relationships and the overall resilience of smaller businesses.

The company argues that many SMEs effectively become unwilling lenders to larger organisations when invoices remain unpaid for weeks or even months beyond agreed terms.

“When payments are consistently delayed, smaller businesses effectively end up financing larger ones,” Quigley said. “That restricts their ability to hire, invest in technology, pursue new opportunities and build the resilience needed to navigate an increasingly uncertain economic environment.

“A delayed payment doesn’t just create inconvenience, it can mean postponing recruitment, delaying investment plans or struggling to meet obligations to suppliers who are also relying on timely payments.”

The warning comes at a time when many businesses continue to face rising operating costs, economic uncertainty and fragile confidence, making strong cash flow more critical than ever.

Quigley believes prompt payment should be viewed as a core element of business strategy rather than a back-office function.

“There is still a tendency to separate payment practices from wider business strategy, but they are directly connected. Strong cash flow is one of the foundations of business resilience. When payment discipline breaks down, it creates knock-on effects that can impact every part of an organisation.

“Businesses spend a great deal of time focusing on growth strategies, customer acquisition and operational efficiency, but protecting cash flow deserves the same level of attention. Without it, growth becomes much harder to sustain.”

Darcey Quigley & Co is calling on businesses to prioritise prompt payment practices, arguing that stronger payment discipline will not only benefit individual companies but also strengthen supply chains and support wider economic growth.

Quigley concluded: “Healthy businesses depend on healthy supply chains. If we want to see stronger growth, greater investment and a more resilient economy, improving payment culture has to become a priority. Getting paid on time isn’t simply about financial management anymore, it’s about protecting jobs, supporting growth and safeguarding the future of businesses across the UK.”