Register to get free articles
Want unlimited access? View Plans
Already have an account? Sign in
UK small and medium-sized enterprises (SMEs) in the retail sector are operating under severe cash flow strain, with many waiting the equivalent of nearly a full year to receive income, according to the 2026 Hiscox Late Payments Report
The report found that retail firms chase an average of 14 late payments annually, resulting in a cumulative 331-day waiting period across all outstanding invoices.
The findings come as the total value of late payments owed to UK small businesses reached an estimated £70.4bn in February 2026.
For the average small firm, this represents approximately £12,357 in missing annual income, with nearly a quarter (23%) of all payments arriving past their due date.
The report highlighted that retail and hospitality sectors are among those most exposed to these delays, following only IT, finance, and healthcare in the frequency of payment disputes.
It identified several key operational impacts, noting that while 30% of businesses typically receive payments within two weeks of a deadline, 17% wait more than a month, and 20% of all invoices are currently overdue.
It also stated that there is a clear correlation between business size and payment delays; for instance, late payments rise from 19% for sole traders to 25% for firms with 10 to 49 employees.
Furthermore, these delays carried significant recovery costs, with small firms estimated to spend up to £5,200 annually in lost time and resources dedicated specifically to credit control.
The findings coincide with a government push to eradicate late payments through the Fair Payment Code.
Launched in early 2025 to replace the old prompt payment system, the new code uses a tiered award structure to incentivise transparency and reward firms that settle invoices within 30 days.
Despite 62% of business owners expressing optimism about the government’s Fair Payment Code, which celebrated its first year in early 2026, the report stated that the structural culture of late payment persists.
Nick Thornhill, direct and partnerships director at Hiscox, said: “Late payments might be a recurring character in the small business world, but they don’t have to be a thorn in your side. With 331 days of cumulative waiting time, it is vital for firms to keep their cash flowing and their focus where it belongs – growing the business.”
