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Small and medium sized enterprises are the backbone of the UK economy. They are integral to continued economic growth and are a feature of everyday life for the vast majority of UK citizens. The problems they face impact us all. Right now, late payments are one of the biggest issues affecting these businesses. Research from Barclays shows that three in five SMEs are currently owed money from late payments.

Late payments leave many SMEs struggling to maintain healthy cash flow, putting their futures at risk. And a struggling small business sector affects everyone within the supply chain, including large organisations and the UK economy as a whole. It places additional pressure on every aspect of the country’s economy, at a time when many companies could do without it.

The bigger SME picture

At the start of 2021, SMEs accounted for 99.9% of the UK’s business population (GOV). The UK government distinguishes between micro, small and medium businesses in the following way (GOV):

  • Micro business – less than 10 employees and an annual turnover under £2 million
  • Small business – less than 50 employees and an annual turnover under £10 million
  • Medium business – less than 250 employees and an annual turnover under £50 million

This distribution demonstrates just how dominant SMEs are in the UK commercial landscape. They outnumber any other type of business by a considerable amount and are the principal driving force behind the UK economy. Though they may be the driving force, they’re by no means in the driving seat. Often, smaller businesses are at the mercy of the larger organisations they interact with.

Nowhere is this more evident than the issue of payments. Larger companies typically have the power to dictate payment terms to SMEs. This results in long terms that can impact cash flow and put them under significant pressure. Even worse, some larger companies regularly break the terms of the arrangement and pay late, leaving some small and micro businesses struggling to make ends meet.

However, late payments are not just an issue for smaller businesses. They affect larger companies, too. In this series of blogs, we look at how late payments impact the entire business landscape – from sole traders to multinational corporations. Today, drawing on our recent conversation with Liz Barclay, the Small Business Commissioner, we begin by providing a general overview of the effect late payments have on organisations of all sizes.

State of late payment

In a recent conversation with the Small Business Commissioner, Liz Barclay highlighted how widespread late payments are. “We’re still seeing around 40% of invoices not being paid to terms,” she noted. “15% of those invoices aren’t chased by small businesses because they simply don’t have the resources.”

However, it would be wrong to suggest that this is an entirely new problem. The power imbalance between larger organisations and the SMEs that play vital roles in their supply chains has existed for many years: late payments have caused issues in the past, just as they do now.

“E-commerce and cloud accounting solutions have made a lot of difference over the last 15 years,” Liz Barclay explained. By automating key processes and ensuring there is greater transparency in the payment process, digital technology has ensured average payment terms have gradually decreased.”

However, small businesses still struggle to chase invoices. They do so for a range of reasons. Chief amongst them are a lack of time, money and staff availability. Smaller businesses often operate on slim margins, with little room to manoeuvre. This means they can’t chase payments without impacting other areas of the company. Even when they can do so, there is no guarantee that payment will be made promptly.

Let’s take a closer look at what late payments mean for small and medium sized businesses.

Late payment is a productivity problem

UK SMEs spend 900,000 hours a day chasing and dealing with late payments. This is a remarkable waste of companies’ time and resources and considerably impacts other aspects of the business. Essentially, time spent processing late payments is time not spent on tasks that add value to the business.

Liz Barclay argued convincingly that this makes late payment a productivity issue for small and micro businesses. “It’s time that you’re not putting into planning your business, building your business or thinking about getting new customers,” she said. Repurposing staff to chase late invoices or taking time out of your day to try and organise payment means you cannot focus on those parts of your business that matter most.

In an increasingly competitive business landscape, productivity is key to realising an advantage over your competitors. Small businesses need every spare minute they can muster to stay afloat, maintain momentum and continue growing. Robbing smaller organisations of that time will lead to more firms struggling and fewer surviving.

Uncertainty is the enemy

Long payment terms – where companies arrange a latest payment date that is relatively far down the line – can be problematic. However, they are nowhere near as much of an issue as late payments. This is because late payments introduce an element that no small business can account for – uncertainty.

Long payment terms might not be ideal, but at least they guarantee the small business will receive payment by a specific date. This allows the business owners to plan and mitigate the long terms. Business owners cannot plan for late payments. They do not know when they will receive payment, and they have no way to compensate for, or plan around, the large hole in their finances.

Liz Barclay explained why this is such a significant issue. “Purely economically, small businesses go to the wall if they can’t manage their cash flow. They can’t manage their cash flow if there’s no certainty, and they don’t know when they will get paid. They need to know when the money will hit the bank account.”

Uncertainty doesn’t just make it challenging to plan. It also makes small businesses wary of investing in their future. As Liz Barclay suggested “Small businesses won’t invest in skills, new jobs, training or equipment unless they have certainty”. Why would an SME increase investment in these parts of their business when they don’t know if they will have the cash to pay for them in the future? In this sense, uncertainty stifles innovation and growth, preventing small businesses from fulfilling their potential and damaging the wider business environment.

Supporting a stronger ecosystem

The idea that late payments only impact small businesses is patently false. Though we will look at how late payments also affect larger companies in greater depth in upcoming blog posts, we will touch on the subject here.

Large companies do not operate in isolation. They’re part of a diverse business ecosystem. Big businesses’ supply chains are made up of small businesses, and they depend on them to manufacture, market and distribute their products. While it may seem as though these larger organisations are insulated from the problems of small businesses – they can, after all, replace one SME partner with another – this couldn’t be further from the truth.

Big businesses need to protect their supply chain to insulate them from potential economic problems and to minimise the chance of disruption. When a partner SME goes out of business, it is disruptive. That disruption may be manageable when things are going well and financial forecasts are optimistic. When things aren’t looking quite as good and larger companies are facing other business pressures, that disruption can be highly problematic.

Liz Barclay spoke to us about her perspective on late payments and their impact on the wider business ecosystem. She warned larger businesses that late payments are creating problems and the effects will be felt in the future. “The next time that you need that talent that contributes so much to the success of your business, it’s not going to be there,” she said. “And then it’s going to cost you a lot more to go out and look for new suppliers who can do that job.”

In some respects, recent events made larger organisations realise the importance of a healthy ecosystem to their operations. “The pandemic made many big businesses realise that, if they didn’t nurture and look after their suppliers, they would go to their rivals or be put out of business,” Liz Barclay said. “Until we start getting that message to bigger businesses, they won’t see that they’re shooting themselves in the foot.”

Small business owners are struggling

For small and micro business owners, late payments aren’t just an operational issue. They dramatically impact how they live their lives and support themselves. Liz Barclay recounted a call the office of the Small Business Commissioner received from a business owner who was suffering because they were not paid on time.

“We had one woman who phoned to tell us that she had no money to feed her children over the weekend,” she described. “When the case officer then phoned the bigger company and spoke to the CFO, the CFO admitted that it had never occurred to them that £300 could be so important.”

In many instances, larger businesses are not maliciously denying payment to cause harm. They simply do not recognise that their payments can be the difference between a small business owner being able to put food on the table or not. In some ways, this is understandable. Big businesses deal with much larger sums, operate on a different scale, and in a more bureaucratic environment. In this environment, the human impact of business decisions and actions is less clear.

In the case of the business owner unable to feed her children due to late payment, making the larger organisation aware of the human cost of late payment resulted in action. “The company’s CFO asked the case officer for the small business owner’s personal bank account details, and they paid her directly there and then,” Liz Barclay recounted.

Tackling mental health concerns

The example cited in the previous section highlighted the financial cost of late payments to small business owners. This cost is considerable and clear to see. However, there are more insidious costs that are harder to measure but no less problematic. The most significant is the toll late payments take on small and micro business owners.

“Late payments aren’t a purely economic problem,” Liz Barclay noted. “For small businesses, micro-businesses, freelancers and sole traders, they can cause sleepless nights. And sleepless nights lead to mental health problems. We are increasingly seeing people with mental health problems because they’re being paid late or not being paid within reasonable terms.”

It is easy to forget that late payments can have deeply personal ramifications. On a personal level, employees at larger companies are largely insulated from the repercussions of everyday business processes. Their income is not dependent on the outcome and efficiency of key business processes. Whether or not there are problems, they typically still receive their monthly wage slip.

That’s not true of small business owners. Their personal lives are deeply entangled with their professional lives, and they face an entirely different set of workplace pressures. The uncertainty associated with late payments (discussed earlier in the article) puts tremendous pressure on business owners, which manifests as considerable stress. The emotional toll can be enormous.


As this article demonstrates, late payments significantly impact small businesses and their owners. While the most obvious effect is financial, with smaller companies struggling or going out of business, there are other underlying effects that we take for granted. Late payments prevent small businesses from investing in their organisation, reducing productivity and holding the economy back more generally.

At the same time, late payments have a real and very worrying impact on business owners’ mental health and ability to make ends meet. Cash flow uncertainty puts SMEs in a position where they’re operating on a knife edge and constantly worrying about the future. This is unsustainable, and burnout in small businesses is becoming a genuine concern. 

Of course, late payments also affect larger businesses, most notably by creating insecure supply chains that are open to disruption. However, large companies also benefit from making payments on time. We will examine those benefits in an upcoming blog post soon.

(August, 2022) In a recent podcast, The Small Business Commissioner, Liz Barclay, issued a warning that without confidence in cash flow, the UK’s small and micro businesses would be restricted from investing in new jobs, equipment and training or risk shutting shop.

During the conversation with Saltare CEO, Anthony Persse, Liz Barclay raised the issue of late payments hindering small and micro businesses, because often they’re forced to stretch funds if invoices are delayed or paid late. This has a knock-on effect in cutting budgets for new staff or research and development.

“If we look economically, small businesses are put at risk and can’t manage their cash flow if they don’t have payment certainty or know when payments will be made. This means they either have to stretch their funds or look elsewhere for funding, and this limits their investments not just in business growth but business-as-usual functions.”

Liz Barclay

In addition to the strain put on business owners’ books through late payments, Liz also raised the issue of the mental health challenges business owners face through not having sufficient cash.

Particular areas of focus for Liz are freelancers, sole traders and micro businesses. She believes these individuals and owners are most at risk of struggling with mental health challenges and sleepless nights, due to an unpaid invoice putting their livelihood at risk.

These issues also flow through into the local communities, when small and medium-sized businesses are impacted by late payments, something Saltare is committed to resolving through its Early Pay platform.

Anthony Persse, CEO of Saltare said:

“Chatting to Liz, really brings home how important it is for business leaders and policymakers in the UK to prioritise paying on time. Early payment and the certainty of payment ease cashflow concerns and improves the likelihood of future success and growth. Conversely, poor cashflow and poor payment practices ultimately leads to business failure and insolvency.”

Listen to the full interview between Anthony Persse and Liz Barclay below:

Early Pay is a unique payment solution that boosts your business, supports your suppliers, and transforms the entire economic landscape. Helping you to create a solid supply chain that is built on confidence and trust. Enabling you to become the customer of choice.

Our ground-breaking digital solution Early Pay, is a quick, and easy way to offer and facilitate early payments. You can provide peace of mind to your suppliers by delivering certainty of payments through automated communications, whilst giving them the option to get paid sooner – and in just 3 clicks.

Watch our short video to find out more.

What’s in it for you?

-A strong supply chain with improved business relationships

-Delivery of tangible social impact throughout your supply chain

-Financial benefits achieved through potential early payment
discounts. Plus operational efficiencies as a result of reduced
inbound invoice queries

-Access to new and valuable supply chain data and insights.

What’s in it for your Suppliers?

-Reduced anxiety as a result of certainty of payments

-Improved cashflow from early payment potential

-Reduced need to secure alternative funding to support
their business

-No more need to chase payments, freeing them up to
focus on customers, like you

Early Pay by Saltare

We improve the flow of cash to the entire supply chain in a way that works for everyone.

How does it work?

Its really smart and really simple…..

Once you’ve approved an invoice, Early Pay will notify your supplier. You can offer to pay early (and choose whether to apply a discount or not). Your supplier can accept the offer if they wish to, in just 3 clicks. There’s no obligation either way, but your suppliers will have the peace of mind of knowing exactly when they’ll be paid

We recently spoke to Liz Barclay, the current Small Business Commissioner – a post created to help small businesses secure the payments owed to them and to galvanise UK businesses behind a new culture of prompt and fair payment.

During the conversation we discussed the impact of poor payment practices on UK small and micro businesses, and how the uncertainty of payment affects all elements of their enterprise including how they manage their cashflow, make decisions on recruitment & investment and importantly, the mental heath impact.

We also discussed how larger businesses can support small and micro businesses by employing good payment practices. And the benefits that has on creating a sustainable supply chain.

Whether you’re a buyer or a supplier, businesses of all shapes and sizes are striving to recover from the financial effects of the pandemic. Here’s why we think encouraging early payments could play a key part in helping you do just that.

It’s no secret that – despite recovery packages and businesses’ best attempts to keep afloat – the past few years have been tough going for most organisations. With a firm focus now on recovering from the financial impact of the pandemic, in a still volatile global market, keeping a tight hold on any factors that we can control is front and centre of most people’s minds.

And maintaining a healthy supply chain, built on a strong foundation of commercial relationships, reliability and trust, is just one of those factors.

The government has set out a Social Value Model to help organisations do just that.

What is the Social Value Model (SVM)?

The SVM is a set of priorities that the government expects public sector bodies to apply when buying from the private sector, with the aim of boosting social wellbeing, reducing poverty, and keeping things fair. It’s aimed at helping businesses recover economically by encouraging collaboration – all designed to boost businesses’ ability to level up and achieve or retain success.

How do early payments come into that?

Paying suppliers on time is a huge part of maintaining a strong supply chain, and it’s something that’s set out clearly in the SVM.

Recognising that lots of SMEs (small and medium enterprises) or VCSEs (voluntary, community and social enterprises) are kept waiting by late payments, which has a knock-on, negative impact on their cashflow, the SVM encourages prompt payment to recognise the value of these types of suppliers in overall supply chains – all while supporting entrepreneurship, too.

What’s the impact of late payment?

There are around 5.8 million SMEs in the UK, which means they make up over 99% of all businesses in the country. Eight in ten of these businesses are having to wait over a month beyond the terms they agreed with their clients to get paid.

Bacs Payment Schemes, now part Pay.uk, did some research into what happens when SMEs are kept waiting for their money. They found that over a third use their overdraft facilities just to meet their monthly payments, that 43% are spending around £4.4 billion in late payment related admin costs and that more than one in ten SMEs have been forced to hire new recruits to chase unpaid bills.

It’s a social problem, too, with a ripple effect on the wider community. As Intuit QuickBooks found during global research in April 2020, one in seven small businesses have found themselves unable to pay their employees – a situation that has affected 2.2 million individuals.

And at Saltare, we just don’t think that’s fair.

Be part of the solution

Let’s park the idea that late payments are bad, for a second – and start thinking instead about the positive impact that early payments could have.

Our Non-Executive Director, Philip King, believes there’s genuine value in paying suppliers on time, or even earlier when possible:

“In the 21st century, with the technology that we all benefit from to move money around, 30-day payment terms – or even longer – are simply behind the times, and delayed payments can have devastating consequences for small businesses and their owners. Almost every modern business has the opportunity to play their part in adding Social Value and contributing to economic recovery in their communities while, at the same time, building a stronger and more resilient supply chain.”

With that in mind, the good news is that all types of businesses and organisations can play a key part in contributing to social value in the community. It’s one of the key reasons we set up Early Pay – and it couldn’t be simpler to get involved.

What is Early Pay?

Early Pay is a fully flexible scheme that means you can offer to pay your suppliers early in exchange for a discount. As well as saving you money, it supports your suppliers’ cash flow – meaning they can reinvest, expand, or pay their suppliers; whatever gives them the boost they need.

On top of that, with Early Pay, you can offer early payments to suppliers in any industry, in any country and in any currency.

Which means there’s no limit to the amount of social value you can support. And no limit to how much money you can save – all while helping to speed up economic recovery.

Get in touch

You can find out more about Early Pay at saltare.io


* https://www.smeloans.co.uk/blog/cash-flow-statistics-uk/#:~:text=1%20in%207%20small%20business,left%20unable%20to%20pay%20debts

** https://quickbooks.intuit.com/blog/news/small-business-cash-flow-the-state-of-payments/

Having a strong supply chain is one of the most powerful tools you can have in your arsenal. Creating a solid network of all the organisations involved in delivering your product or service to your end customer – from vendors to producers, warehouses to retailers – is critical to keeping things running smoothly. In fact, it can make or break your success.

Here’s why they could be the key to making your supply chain even stronger.

Building confidence and trust

It might sound simple, but don’t under-estimate the importance of having confidence in and being able to trust each and every member of your supply chain. Early payments can help build this confidence – for both suppliers and customers alike.

If you’re a buyer, offering to pay early (for example in return for a small discount), signifies that you’ve got the cash ready and waiting, and are considerate of the fact that your supplier might benefit from a boost to their cash flow before the date their invoice is due.

For suppliers, being able to incentivise your customers to pay early by offering a small discount signals sound financial wellbeing. If you’re able to offer your services or products at a beneficial cost, it implies you’re not stretched to the last penny – which gives customers confidence and reassurance that you’re not at risk and they’ll be able to keep buying from you.

Access to better deals

It goes without saying that, if early payment benefits both buyer and supplier, there could be great deals attached to paying up early. When either side is empowered to use early payment as a tool for negotiation – whether that’s a reduction in price, a speedier delivery, or another mutually agreed benefit – it can help move things along exponentially, and might even lead to longer term process changes in your supply chain that keep things really efficient and effective.

Reputation builder

If you’re a buyer that’s offering to pay early, you’re going one step further than avoiding a reputation as a nightmare customer that your supplier has to keep chasing: you’ll become a preferred choice.

When suppliers are stretched or at capacity, they’ll be in a position to choose who they work with. Customers or buyers with good reputations for paying on time (or, even better, early) are much more likely to make their way up the food chain of preference – and might even attract more suppliers looking to work with them, as a result of word of mouth, too.

Growth on both sides

It’s no secret that, for the SMEs and start-ups that form a bulk of the UK’s suppliers, cash is king. Offering early payment can be a real cash injection that helps SMEs out with their cashflow. And good cashflow means more money to invest and grow.

But the benefits aren’t one sided. If you’re a buyer that’s looking to grow, you’ll need your suppliers to be able to keep up with your ambitions – which will likely lead to an increased demand for goods or services. By paying them early and helping them grow, you’ll be helping them to help you grow, when the time comes.

Only as strong as your weakest link

When it comes down to it, your supply chain is only as strong as its weakest link – and late payment has a habit of breaking the bonds that the chain relies on. In fact, according to a recent survey of 500 UK decision makers, 86% agreed that one single late payment affects everyone in the supply chain. And, out of the 31% of businesses that admitted paying a supplier late, almost half say it was due to a late or failed payment from their customer.

So, if late payment has a knock-on, negative impact on everyone in a supply chain, imagine the knock-on, positive impact that early payment could have, if things were reversed?

How Early Pay can help

If reading this has convinced you that building early payment into your supply chain is something you should be looking at, you’re in the right place.

Our CEO, Anthony Persse, thinks it’s time to turn the conversation about late payment on its head: “By shifting towards a more positive conversation about ‘early payment’, we will do much more than simply improve payment performance. We will help create more jobs, deliver greater levels of investment and generate deeper social value with long-term sustainability at a time when the country needs it most.”

If you’d like more information, please get in touch with the team at [email protected] and we’ll be happy to help.

The environmental, social and governance impact and responsibilities that all businesses have – often referred to as the ESG agenda – is a big priority at the moment. Organisations of all shapes and sizes are recognising that they have a duty to try to make the world a better place, whether that’s by lowering their carbon footprint, boosting investment in their local community, or making sure they’re governed properly and fairly.

At Saltare, we think that early payments are one of the best ways for organisations to drive social value – and make a real difference to small businesses in particular. Here’s why.

What is social value?

Social value is essentially an umbrella term for how much value an organisation provides to society. It’s a measure of the impact they have on social factors around them, from wellbeing to efficiency, productivity and profit.

How can early payments create social value?

Late payments cause no end of problems for everyone involved in a supply chain but in particular for SMEs. It’s a huge concern for our CEO, Anthony Persse, and something we’re trying hard to fix.

“Businesses don’t fail because of lack of profit, the primary reason they fail is that they run out of cash.”, says Anthony Persse, CEO at Saltare. “Cash is absolutely critical to business survival and the wellbeing of a business owner. So, it’s unsurprising that a significant part of a small business owners time is spent chasing cash from unpaid invoices.”

“There’s a huge amount of evidence highlighting that many small businesses are paid late. If invoices are accurate and timely, and goods or services are delivered as promised, there should be no excuse for late payment. In fact, what if we could go one step further than just paying on time – and think about meaningful incentives for paying early, instead?

“It’s time to turn the ‘late payment challenge’ into an ‘early payment challenge’ – and reverse the negative impact of late payment into a positive one of early payment.”

Injecting cash into the supply chain

Having a strong and sustainable supply chain, based on solid relationships, is one of the most critical tools any business can have in their arsenal. Late payments cause more problems than just hold ups in supply chains – they stop both buyers and suppliers having the tools they need to succeed and grow.

What’s more, they can cause reputational damage too – and, as you’re only as strong as the weakest link in your supply chain – that’s not a risk worth taking. Early payments could be the key to things running smoothly.

Giving the gift of time

Rather than spending time chasing payments or tracking down customers who’ve gone quiet, imagine if small business owners could focus exclusively on what they’re best at – running their business?

The cost of lost opportunity due to payment chasing is hard to quantify, but a study by Tide in Jan 2020 reported that up to 900,000 hours a day was spent by small businesses chasing payments. If approximately 1 hour a day is spent chasing payments – that amounts to 14% of an average working week.

It works both ways, too. If SMEs are chasing payments, that means their customers’ finance teams or invoice departments are the ones being chased – and spending time fielding and replying to enquiries.

Just think what both busy SMEs, and buyers’ finance teams, could do if they had that time back.

The human cost

Finally, but perhaps most importantly, early payments can hugely reduce the human cost that late payments have for SMEs.

Given that cash is so important to small businesses, it’s no surprise that having the confidence that you’re going to get paid (and knowing exactly when) is a big priority for business owners. Not knowing causes stress, worry, and anxiety – which can ultimately damage overall wellbeing, according to Pay UK.

That uncertainty also makes it harder to make decisions about investment and recruitment – and even paying your suppliers, too.

How Early Pay can help

Early Pay works for the entire supply chain – and effectively levels the playing field. It’s all about transparency, with simple, clear communications for both buyers and suppliers. Knowing when and how people will be paid is a great start, but Early Pay also offers the chance to be paid early, too – in exchange for a small discount. If that sounds like something you’d like to implement into your ESG agenda, get in touch with one of our team.