The time SMEs take to pay their suppliers has increased as delays in invoices being settled create a ripple effect across the economy.
SMEs take an average of 37.1 days to pay supplier invoices, up from 31.9 days in the first quarter of 2025, according to a report by Sage.
Almost half of invoices owed to SMEs are overdue, the analysis of data from around 150,000 firms found, with businesses waiting an average of 27 days to receive payment.
The news follows the Commercial Payments Bill passing its second reading in Parliament last week.
First announced in March and confirmed in the King’s Speech, the Bill includes stronger powers for the Small Business Commissioner to investigate, adjudicate
There will also be a 60-day cap on payment terms for large firms, mandatory interest on late payments, and action to ban the practice of retentions in construction.
Other changes are requirements in secondary legislation for large companies to publicly report the amount of interest they have paid and the interest they owe, and a requirement for boards or audit committees of persistently late-paying large companies to publish commentary on why their payment performance is poor and actions they are taking to fix it.
Emma Jones, Small Business Commissioner and SMEWeb columnist, said.
“Sage’s data shows that more needs to be done to tackle late payments, with too many small businesses still waiting weeks to be paid.
“That’s why action to improve payment practices is so important. It gives firms greater certainty over their cash flow and the confidence to invest, hire and grow. Tackling late payments isn’t just about fairness; it’s essential to unlocking the full potential of the UK’s small businesses.”
SME profits up
In other findings from the Sage report, UK SME profits grew by 7.4% in the year to the first quarter of 2026, the strongest rate of growth since 2022.
Real revenues increased by 3.2%, marking a fourth consecutive quarter of growth.
Derk Bleeker, chief commercial officer at Sage, said:
“The UK’s small business community continues to demonstrate extraordinary resilience to adapt and grow.
“The fact that profitability has reached its highest level in four years is a testament to the determination and ingenuity of business owners across the country. It also highlights the opportunity that exists to help SMEs build on this momentum and unlock even greater growth in the years ahead.”