London, 14th May 2025 – Sage, the leader in accounting, financial, HR and payroll technology for small and mid-sized businesses, has today released the most up-to-date research highlighting that the UK’s smallest businesses are owed an average of £42,000 in overdue invoices1 – a figure that has increased for three consecutive years2.
Commissioned by Sage and conducted by the Centre for Economics and Business Research (CEBR), they analysed over 1.2 million anonymised invoices issued by more than 31,000 Sage customers. The findings show 44% of invoices were paid late, choking cash flow and hampering the ability of small businesses to meet payroll, cover operating costs and invest in growth. In total, £112 billion is currently locked up in late payments – capital that should be circulating through the economy.
In April, the International Monetary Fund (IMF) revised the UK’s 2025 growth forecast down from 1.6% to 1.1%. Sage’s findings suggest that persistent late payments are limiting small business productivity and resilience and could be contributing to the broader economic slowdown.
“Late payments have worsened over the past three years,” said Christopher Breen, Head of Economic Insight. “While payment times are falling slightly, it’s not enough to offset the rising value of overdue invoices. With the average late invoice now comparable to the typical cash a small business holds, this issue is withholding capital that could be used to invest or build resilience.”
Action required to help SMBs
The findings were unveiled today at an event in the House of Commons which brought together the Federation of Small Businesses and Enterprise Nation, along with small business owners, MPs and the Secretary of State for Business and Trade, Jonathan Reynolds MP. With the Government actively looking at policy solutions to address late payments, Sage is calling for the government to move ahead with rolling out e-invoicing as a central pillar of a wider digital adoption strategy that empowers SMBs to embrace tech to grow.
"Research from Sage shows that small businesses are owed billions in late payments and unpaid invoices. This isn't just an inconvenience, it's holding back 5.5 million SMEs which are the backbone of the UK economy,” said Jonathan Reynolds, Business and Trade Secretary. “Whether it’s our new Fair Payments Code or the consultation into late payments, our Plan for Change is tackling this issue. This government is listening and taking decisive action to create an economic environment that allows businesses to plan, invest and grow."
Digital solutions key to unlocking growth
There are many factors contributing to this, including, incorrect invoice details, missed reminders, and manual systems all contribute to delays that could be avoided. With E-invoicing, this could be a thing of the past.
Combining e‑invoicing with Sage Copilot’s AI would minimise invoice errors, reduces late payments by up to 20 %, and accelerate cash flow. Other countries like Singapore, Japan and the EU are moving ahead with e-invoicing and the UK is currently consulting on how to increase adoption across UK businesses. Sage is encouraging the government not to be left behind and introduce policies that enable small businesses to adopt modern tools to accelerate growth.
“It’s clear that too many small businesses continue to be held back by outdated systems and slow payments, but this is a fixable problem,” said Derk Bleeker, Chief Commercial Officer at Sage. “Digital tools are already helping businesses get paid faster, reduce admin, and unlock cash to invest in growth, but it is imperative that policy in UK continues to enable them further. With AI assistants such as Sage Copilot and E-invoicing, businesses have the opportunity to drive better cashflow, improve efficiency and fuel growth.”
To find out more about Sage visit: https://www.sage.com/en-gb/
1 Over 1.2 million anonymised invoices in Q3 2024 were analysed for Sage by the Centre for Economics and Business Research. They came from over 31,000 small business Sage customers (SBCA) across the UK with headcounts between 0-9. This data was then supplemented with other sources and extrapolated to reflect the whole economy.
2 Firms that employ between 0-9 employees in the UK were owed £112.2 billion in late invoices in Q3 2024. This is up from £109.0 billion at the end of 2023, and £104.3 billion at the end of 2022 (in 2024 prices).
About Sage
Sage exists to knock down barriers so everyone can thrive, starting with the millions of Small and Mid Sized Businesses served by us, our partners and accountants. Customers trust our finance, HR and payroll software to make work and money flow. By digitising business processes and relationships with customers, suppliers, employees, banks and governments, our digital network connects SMBs, removing friction and delivering insights. Knocking down barriers also means we use our time, technology and experience to tackle digital inequality, economic inequality and the climate crisis.
