My Customers Won't Pay on Time
If customers consistently pay late, invoice finance removes the problem entirely - you get 70-95% of the invoice value within 24 hours regardless of when the customer pays. You can also charge statutory interest (8% + base rate), offer early payment discounts, use debt collection, or tighten credit terms for new customers. More detail + scope
Summary
Late payment costs UK businesses £684m annually. Average overdue amount per SME: £22,000. Invoice finance is the fastest solution - you stop waiting and get paid immediately. The provider handles the waiting. Other options include the Late Payment Act (statutory interest), early payment discounts (2/10 net 30), and credit management.
This page covers
Why customers pay late, 5 solutions ranked, practical steps for each
Not covered here
Legal action (seek solicitor advice), specific provider recommendations (see /providers/)
You're not alone. UK SMEs are owed an average of £22,000 in overdue invoices at any time. Late payment costs UK businesses £684 million a year. But here's the thing - you don't have to wait. Invoice finance means you get paid within 24 hours of raising the invoice, regardless of when your customer gets around to paying.
Why Customers Pay Late
It's rarely personal. The usual reasons:
- They can. Large companies know small suppliers won't push back. Paying late is free cash flow for them.
- Accounts payable cycles. They batch payments monthly. Your invoice sits in a queue.
- Disputes or queries. Something on the invoice needs clarifying and nobody told you.
- They're struggling too. Cash flow problems cascade down the supply chain.
- You didn't chase. Businesses that chase early get paid first. Those that don't, don't.
The Fix: Stop Relying on Them Paying on Time
The most reliable solution isn't to change their behaviour - it's to remove your dependence on it. With invoice finance, you get 70-95% of every invoice within 24 hours. Whether the customer pays in 30 days or 90 days, you already have your money.
The cost? Typically 0.5-3% of the invoice value. On a £10,000 invoice, that's £50-£300. Compare that to the cost of not being able to pay your own bills, suppliers, or staff.
Get 3 free quotes and see what it would actually cost for your business.
Other Things You Can Do Right Now
Chase on day 1, not day 31
Send a payment reminder the day after the due date. Then at day 7, day 14. Most businesses just wait. Don't.
Charge statutory interest
Under the Late Payment of Commercial Debts Act, you can charge 8% + base rate on any late B2B payment. Full guide here.
Offer a small early payment discount
"2% discount if paid within 10 days" (2/10 net 30). Some customers will take it. It costs you 2% - similar to factoring fees anyway.
Credit check new customers
Before offering credit terms, check their payment history. Creditsafe and Experian Business cost £50-200/month and save thousands in bad debt.
Founder & Managing Director, Muswell Rose, founder and PSC of Best Business Loans Ltd
Adam is the founder and managing director of Muswell Rose and a founder of Best Business Loans Ltd, the company behind Market Invoice. He spent over three years as managing director of Penny, a UK invoice finance business, and his career runs through insurance, mortgages, commercial finance and fintech lending. He writes the Market Invoice library.
Last reviewed: 7 April 2026