A short post on X (formerly Twitter) has recently shone a spotlight on a challenge small businesses across the world know all too well: late payments.
The UK's Prime Minister, Keir Starmer, has put the spotlight back on the late payment challenge facing businesses. But beyond politics, this is a conversation every business owner, whether in London, New York, Berlin, or Sydney, can relate to.
While government policy may influence the environment, the reality is that late payments are an everyday operational problem. They drain time, energy, and resources from the businesses that can least afford it. This blog explores the scale of the late payment challenge, why it matters, and most importantly, what businesses can do to tackle it.
The global scale of the late payment crisis
Late payments are not a uniquely British problem. Businesses across continents face the same challenge: work delivered, invoices issued, and then… silence. Weeks and sometimes months pass before payment is received.
The numbers are stark:
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United Kingdom: Chaser’s 2022 late payments report found that 87% of UK businesses are paid after their invoice due date, with 52% of invoices paid late and an average delay of 15 days (Late payment report).
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European Union: Nearly 50% of invoices in the EU are paid more than 60 days late, and one in four SME bankruptcies can be traced back to late or unpaid invoices (CFLOX).
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United States: A Gateway Commercial Finance survey found that 64% of small businesses had invoices 90 days overdue, with overdue invoices accounting for an average of 11% of total revenue (Old National Bank).
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Australia: Xero's 2022 report found that 48% of invoices were paid late, with payments arriving, on average, 6.4 days past due, costing SMEs around $1.1 AUD billion per year (Xero).
When considered globally, this amounts to trillions of dollars tied up in unpaid invoices, money that should be fueling innovation, jobs, and investment.
Why late payments hurt so much
For a multinational corporation, a late invoice might be a minor inconvenience. For a small or medium-sized business, it can be the difference between paying staff on time or delaying payroll.
Here’s why late payments matter:
- Cash flow disruption: Cash is the lifeblood of every business. When payments are delayed, businesses are forced to rely on overdrafts, credit cards, or loans, which add costs and risks. It creates a knock-on effect where owners are constantly managing financial fire drills instead of focusing on long-term growth.
- Lost growth opportunities: Instead of investing in new hires, technology, or expansion, SMEs are left waiting for money they have already earned. The lost opportunity is invisible on a balance sheet, but it compounds over time. The difference between growth and stagnation is often tied directly to when invoices are paid.
- Operational strain: Chasing late invoices takes hours that staff could be dedicating to more strategic tasks. Chaser’s research shows businesses spend an average of 90 minutes per invoice pursuing payment when done manually. This burden is often carried by small finance teams or the business owner directly.
- Emotional toll: The financial pressure of late payments often brings stress and uncertainty. For sole traders and family-run companies, this can affect wellbeing far beyond the workplace. It erodes trust between businesses and customers, sometimes leading to strained relationships that are difficult to rebuild.
The hidden costs of late payments
It is easy to think of late payments as simply waiting longer for revenue. The reality is that the costs run deeper:
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Credit control staff costs: Extra wages, overtime, or agency hires for chasing.
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Interest costs: Borrowing to bridge gaps eats into profits.
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Supplier relationships: If you cannot pay on time, your suppliers may restrict terms.
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Reputation risk: Struggling to manage cash flow can impact your business credit score, making it harder to secure financing.
The Federation of Small Businesses estimates that 50,000 UK businesses close each year due to late payments (FSB). That is not just individual failures, it is a systemic economic drag.
Practical steps to tackle late payments
So what can SMEs do? While no system eliminates late payments entirely, businesses can dramatically reduce their risk by adopting these best practices:
1. Be clear upfront
Set expectations early. Include clear payment terms in contracts and invoices. Reinforce them verbally during onboarding. This ensures there is no confusion later. Consistency matters, so make sure to use the same payment terms across customers whenever possible.
2. Invoice promptly and accurately
Delays often start with errors. Ensure invoices are issued immediately after work is complete, with correct details and purchase order numbers. Even small mistakes can give a late payer an excuse to delay settlement.
3. Use staged payments
For larger projects, request deposits or progress payments to avoid full reliance on a final settlement. This reduces exposure to risk and helps maintain cash flow throughout long projects.
4. Automate reminders
Polite, consistent reminders increase the likelihood of on-time payments. Automation ensures no invoice is overlooked, while still allowing for a personal tone. According to Chaser’s 2022 late payments report, businesses using AR software are three times more likely to get an invoice paid before the due date, and combining SMS with email reminders boosts the chance of being paid within a week by 56%.
Download 40 politely-worded templates to get invoices paid and access a full library of scripts that prompt customers to pay without damaging relationships.
5. Offer flexible payment options
Online payment portals, card payments, and direct debit can shorten settlement times by making it easier for customers to pay. The fewer obstacles between your invoice and their bank account, the faster you get paid.
With Chaser’s Payment Portal, customers can settle invoices instantly using their preferred method, and businesses can also offer payment plans to ease cash flow pressures without sacrificing revenue. For seamless processing, Chaser integrates with Stripe for both UK and international businesses, while Chaser Pay gives UK businesses the advantage of lower transaction fees.
Explore how Chaser’s payment options help you get paid faster: Payment Portal, payment plans, Chaser Pay.
6. Track communication history
Keep records of all emails, SMS, and calls. Not only does this help with follow-ups, but it also provides evidence if escalation is needed. Having a centralized log avoids duplication of effort within teams.
Download this invoice tracker template to stay organized with a simple sheet to manage invoice status, due dates, and payment progress.
7. Know when to escalate
Have a clear policy: after a set number of reminders or days overdue, escalate to senior management or formal credit control. A firm but professional approach signals that your business takes timely payments seriously.
Chaser also helps you enforce payment terms automatically by applying late payment fees and offering early payment discounts. These features encourage customers to pay on time without damaging relationships, giving you more control over cash flow. Learn more about how to enforce payment terms automatically with late fees and early discounts.
To further strengthen your accounts receivable process, download the 20 common accounts receivable mistakes guide and learn how to avoid the most frequent errors that prevent businesses from getting paid on time.
Technology’s role in solving late payments
Manual credit control is not sustainable for growing businesses. It is inefficient, inconsistent, and stressful. That is why more SMEs are turning to accounts receivable automation.
Solutions like Chaser:
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Automate polite, personalized reminders via email, SMS, and calls.
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Centralize communication history so every interaction is visible in one place.
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Provide payment portals that make settling invoices quick and simple.
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Track debtor behavior with insights on when customers typically pay.
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Integrate with accounting software to reduce admin work.
The result is clear. Businesses get paid faster, spend less time chasing, and protect customer relationships.
Track essential KPIs like DSO, collection rate, and overdue accounts in one simple spreadsheet with accounts receivable KPI tracker.
The bigger picture: from national debate to everyday action
Keir Starmer’s tweet has put late payments back in the spotlight in the UK, but the issue is universal. Whether it is a café in Melbourne waiting on a catering invoice, a marketing agency in Berlin following up with a client, or a construction contractor in New York chasing final settlement, the story is the same.
The challenge is global. But so are the solutions. By combining clear processes, proactive communication, and smart automation, businesses can protect themselves against one of the most persistent barriers to growth.
Wrapping it up
Late payments may be making headlines, but for business owners, they are an everyday battle.
And while regulatory action can help, the most effective protection lies in taking control: setting clear terms, following structured processes, and leveraging technology to do the heavy lifting.
Because the truth is simple: chasing payments should not hold your business back.
You don’t have to face late payments alone. With the right support, your business can stop being held back and start focusing on growth. Speak to a Chaser expert today and discover how Chaser can help you get paid faster.
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