Better payment practices: Encouraging signs for UK small businesses

Payment times are improving – which is good news for small business owners, and for the economy as a whole. 

New figures from the Government show late payments are at their lowest level since reporting began in 2018. 

Here we take a look at the latest data, what it means for your small business, and why fair payment matters. 

Time to pay reducing 

The statistics, published in July 2026, reveal that, overall, large businesses are paying suppliers more promptly than they were seven years ago, when reporting began:

• The typical time taken to pay suppliers has fallen from 35 days in 2018 to 32 days in 2025.

• The proportion of invoices paid late has steadily decreased from 25 per cent in 2018 to 15 per cent in 2025. 

There are some notable differences in regions and sectors

• In 2025, large businesses in the Midlands had the longest payment times, an average of 38 days. This is considerably behind businesses in London, where payment time is typically 27 days.

• The manufacturing sector lags notably behind every other sector, paying invoices in 45 days, on average, in 2025. In contrast, the financial and insurance sector paid invoices in an average of 21 days.

While it’s an encouraging step in the right direction, late payments haven’t disappeared. Around one in seven invoices is still paid late, meaning cash flow remains a challenge for many small businesses. 

Read more: 6 tips to improve your short-term cash flow

The impact of improved payments on small business

Many small business owners will have had that moment of constantly refreshing their bank account, hoping for their payment to come in before the next bills come out. 

For small businesses, who typically have a smaller cash buffer than the large businesses they supply, being paid on time is essential. 

Faster payments have a knock-on effect. When a business is paid in a timely manner it means they can pay their own suppliers on time. Admin time chasing invoices is reduced and cash flow is improved, giving businesses the time and confidence to invest and grow. 

Read more: Payment terms and late invoices: how to get paid on time

Why Fair Payment matters

We know that late payments is one of the biggest barriers to small business growth, our customers tell us every day, and the stats back it up: 

• Almost 11 business days are lost to time spent chasing late payments per business affected by late payment each year. That’s 133 million hours of staff time across the economy every year.

• 38 businesses close in the UK every day because of late payments – 14,000 each year.

At Funding Circle, we’re committed to backing small businesses to win. So it’s important to us that we lead by example and pay our suppliers fairly, giving them the certainty they need. 

That’s why we sought Fair Payment Code accreditation from the Small Business Commissioner. The Fair Payment Code aims to improve payment practices and recognises businesses that ensure suppliers are paid promptly. 

By paying 95 per cent of our small business invoices within 30 days, we were proud to have been awarded Silver.

Read more: Fair Payment, stronger business: How better payment practices support small business in the UK

Easing late payment headaches

While progress is being made, it’s likely that late payments will still cause your business cash flow headaches. If so, you might find having extra cash flow eases those pinch points every month so you can go back to doing what you do best – running your business.

We have a range of products, designed exclusively for small businesses, from term loans to FlexiPay, our flexible line of credit. Find out which is right for your business and apply online in minutes.

03/08/26: While we want to help as much as we can, the information found here is provided solely for informational purposes and should not be considered financial or legal advice. To the extent permitted by law, Funding Circle does not accept any liability for any loss or damage which may arise directly or indirectly from the use of, or reliance on, the information contained here. If you have any questions, please speak to your professional adviser or seek independent legal advice.