Late payments have long been a challenge for UK small businesses, affecting everything from cash flow and growth plans to day-to-day financial stability. But the true cost often extends beyond the invoice itself.
At Accountex 2026, Small Business Commissioner Emma Jones and AAT President Lucy Cohen highlighted a less visible impact: the time spent managing payment delays. Business owners now spend an average of 86 hours a year chasing unpaid invoices, creating a significant administrative burden alongside the financial strain.
With the government proposing new powers to tackle poor payment practices, including a 60-day payment cap and stronger enforcement measures, the debate is increasingly shifting beyond cash flow. It is becoming a conversation about hidden work, operational pressure and how much time businesses spend simply trying to get paid.
It’s what we discuss in this blog, as follows:
What is the hidden cost?
The true cost of late payments rarely shows up in a single figure. It accumulates—in the follow-up emails, the system checks, the client queries, the invoices that need another reminder.
Research commissioned by the Department for Business and Trade and conducted by London Economics puts the total value of outstanding late payments at £26 billion at any given time.
But the more telling number is 133 million—the hours of staff time lost across the economy every year to work that generates nothing except money businesses were already owed.
That’s the hidden cost. And it points to a challenge that extends well beyond cash flow.
The work before the work
For most small businesses, chasing payment is not the job. The job is serving customers, delivering projects and finding opportunities to grow.
But the administrative weight surrounding payment starts earlier than most people realise.
Jones described a business owner who spent 90 days onboarding onto a client’s procurement platform before payment terms had even begun. Supplier checks, system registrations, approval workflows—all of it consuming time and resource before a single invoice was raised.
Once work is delivered, the process continues. Invoices submitted. Dates monitored. Queries answered. Balances followed up. Every delay creates another task. Every task costs time.
That’s where the 86 hours go.
The figure feels familiar to anyone working in or around small businesses. Accountants are absorbing client support that sits well outside formal engagements. Business owners are managing compliance touchpoints that didn’t exist a few years ago. AI reduces production time but tends to create new oversight responsibilities in its place. The pattern is consistent: it’s not necessarily more work, but more work that surrounds the work itself.
Why small businesses can’t just push back
Cohen, who is also founder and CEO of Mazuma as well as AAT president, put the practitioner reality plainly.
In a large company, a late payment is an inconvenience. In a small business, the timing of when you get paid determines when you can pay someone else. The cascade is direct and immediate.
The theory of what businesses should do—charge statutory interest, enforce payment terms, walk away from bad payers—runs into a harder truth. When the late payer is your largest client, the options narrow quickly. Accountants advising small businesses know this well. You can explain the legal position. You can’t always change the power dynamic.
There’s a quieter cost too. Research from the Commissioner’s office found that 15% of small businesses have avoided doing business with specific customers based on their payment behaviour. That’s not a cash flow problem. It’s a growth constraint—revenue that was never pursued because the terms of getting paid made it not worth the risk.
That’s what makes the 86-hour figure more than a productivity statistic. It represents the cost of operating in relationships where leverage sits firmly with the other party.
What legislation can actually change
The government’s proposed reforms include a maximum 60-day payment term for large companies working with small suppliers, mandatory interest on overdue invoices at 8% above the Bank of England base rate, and sweeping new powers for the Small Business Commissioner to investigate poor payment practices and fine persistent offenders.
To put the interest provision in practical terms: a £10,000 invoice paid 60 days late would generate £193.15 in interest plus £100 compensation under the new rules.
It’s worth noting that the FSB, which helped shape the legislation, has been clear-eyed about what 60 days represents. The organisation welcomed the cap while describing it as a ceiling rather than a standard—a step towards encouraging 30-day payment norms across supply chains, not an endpoint in itself.
Jones was direct about what she expects the legislation to achieve beyond the technical changes: a cultural shift. Her argument is that when behaviour becomes legally mandated, culture follows.
Academic research supports this. Rules that feel discretionary get ignored; rules with consequences get observed. In her own words, the reforms will “reduce the hours spent chasing debt allowing small businesses to focus on more productive and enjoyable growth.”
Cohen made the practitioner version of the same point. Clear maximum terms remove the awkwardness from the relationship. If 60 days is the legal ceiling, the conversation between supplier and client changes. The constraint moves from the relationship to the rules. That takes pressure off accountants who currently must navigate that tension on their clients’ behalf.
For planning purposes alone, the certainty matters. If you know the maximum is 60 days, that’s what you model. You’re not sensitivity-testing out to 120. That reduction in uncertainty has real value for cash flow management and business decision-making.
The Commissioner’s office has also demonstrated it can act: it recovered three times more overdue invoices in 2025 than in 2024, before the new powers had even been granted.
The accountant absorbs the gap
Accountants increasingly sit at the centre of these changes. Sage ‘Hidden Hours’ research found that 81% regularly take on tasks outside their agreed scope of work, while 70% say their fees don’t reflect the full range of support they provide.
Late payment issues fold naturally into that wider role. A delayed payment affects forecasting. Forecasting affects decisions. Decisions affect hiring, investment, and growth. Accountants have become, in effect, the shock absorbers between increasingly complex systems and the businesses trying to operate within them.
Jones was explicit that the reforms can’t succeed without the profession’s involvement. Accountants are typically the first call when new legislation lands. They’re also best placed to translate what the rules mean in practice—not just technically, but commercially. What does a 60-day maximum actually mean for your cash flow model? How should you update your client onboarding advice? What do your payment terms need to say?
That advisory role is expanding whether practices have formally priced it or not.
The wider pressure
Late payments don’t exist in isolation.
Across the Accountex event, businesses, accountants and technology providers discussed different subjects but described strikingly similar experiences. MTD. AI adoption. Compliance requirements. Supplier onboarding. Cash flow management.
These aren’t separate issues. They’re symptoms of the same underlying shift: work is becoming more continuous.
Historically, many business processes ran in cycles—reviewed monthly, reported periodically, resolved at year-end.
MTD is dismantling that model.
Connected systems create greater visibility but also greater responsibility for responding to what you can now see. AI accelerates production but generates outputs that need reviewing. A payment delay surfaces sooner. An exception needs investigating. The work doesn’t disappear—it shifts from production to oversight.
Jones touched on this tension in a different context, describing the fine line between government support and what small businesses experience as surveillance. The same tension runs through every new compliance layer: the intent is to help, but the accumulation of requirements lands as burden. Legislation that removes one friction point often reveals another sitting behind it.
Final thoughts: How to win back time
The 86-hour figure is a useful reminder that productivity isn’t only about working faster.
Sometimes it’s about removing the friction that stops valuable work from happening. Jones set herself a clear measure of success: when the office surveys business owners again in two years, that figure should be lower.
The deeper shift is structural. As work becomes more continuous and more visible, staying in control means recognising the hidden hours before they accumulate.
For small businesses, that starts with getting paid. For accountants, it starts with understanding how much of their time is already being spent helping clients do exactly that.
Frequently asked questions
Hidden hours are time-consuming tasks that support work rather than directly generate revenue—chasing payments, managing compliance, onboarding customers, responding to queries. They accumulate into significant operational pressure without obvious commercial value.
Business owners spend an average of 86 hours a year chasing unpaid invoices, according to research commissioned by the Department for Business and Trade and conducted by London Economics. Across the economy, this adds up to 133 million hours of staff time lost every year.
The reforms include a 60-day payment cap for large companies working with small suppliers, mandatory interest on overdue invoices at 8% above the Bank of England base rate, and stronger powers for the Small Business Commissioner to investigate poor payment practices and fine persistent offenders.
Late payments create cash flow uncertainty and significant additional administrative work. Fifteen percent of small businesses have avoided pursuing work with specific customers because of poor payment behaviour, making late payments a direct constraint on growth.
Accountants absorb the operational consequences of payment delays—updating forecasts, reviewing payment terms and helping clients navigate cash flow decisions. Hidden Hours research from Sage found that 81% regularly perform work outside their formal scope, with late payment support frequently falling into that category.
Automated invoicing, payment reminders and digital payment tools reduce the manual administration involved in chasing outstanding invoices, turning hours of follow-up work into a largely hands-free process and freeing time for higher-value activity.
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