Faster payment could unlock an extra £60bn of revenue for British Small Businesses

  • New research finds £40bn – £60bn of additional revenue could be unlocked for small businesses if their large customers paid them on receipt of invoices.
  • Instant payment could also help small businesses create up to 460,000 extra jobs in the UK economy and increase their annual profits by £6.3bn.
  • Covid-19 has reversed the trend of improving payment times by Britain’s large companies, with the average time taken to pay suppliers rising to over 37 days.

New research published today by the Good Business Pays movement highlights the huge positive economic impact faster payment of invoices could have on small businesses and the wider UK economy.

The study, carried out by the Centre for Economics and Business Research (CEBR), estimates that if small businesses invoices were paid on the day they were submitted, their revenues would increase by £40bn – £60bn per year. This could provide a significant income boost for small businesses, helping them play a stronger role in the UK’s economic recovery.

The Good Business Pays research estimates instant payment of small businesses will increase the gross value added (GVA) contribution they make to the economy by between £12.7 billion and £19.7 billion per year. The existing ratio of GVA to employment suggests this could support between 295,000 and 460,000 extra jobs across the UK.

The study also found that small business profits would be between 1.8% and 2.7% higher in a scenario where they are paid instantly by large customers. Collective profits across the small business sector would rise by up to £6.3 billion per year, helping businesses claw back some of the losses they faced during the Covid-19 pandemic and make them more resilient in the future.

Today, large companies take on average 37.4 days to pay their suppliers, suggesting an additional £1.6 billion could be generated by small businesses for each day less they have to wait for payment.

Covid-19 has reversed trend towards faster payment

This new research into benefits of faster payment also revealed that the recent trend for shorter payment periods by large companies had reversed during the Covid-19 pandemic.

An estimated 2.3 million small businesses currently offer trade credit to their customers, of which 1.1 million report having problems with customers paying later than their agreed payment terms.

The Good Business Pays research highlights a measurable worsening of payment practices. In the two years running up to the Covid-19 pandemic, large businesses had been gradually improving their average payment times. During the pandemic, this trend reversed with the average time increasing from 36.4 days to 37.4 days.

In addition, the proportion of invoices paid later than 60 days jumped by over 8% between 2019 and 2020 to one in seven (14.9%) of all invoices. In January 2021, the Federation of Small Businesses reported that a record 250,000 small businesses are set to close this year under combined pressure from the Covid-19 pandemic and Brexit.

As businesses big and small strive to recover, they must step up and do all they can to help repair the UK economy. Now, more than ever it is important for big companies to re-evaluate their payment terms to the small suppliers who helped keep them afloat.

From launching the Good Business Pays movement in late May, I am encouraged by the positive signals coming from many of Britain’s big businesses. Making moves to pay invoices faster has never been easier, with tech enabled systems available to help businesses pay quickly, reduce risk, increase efficiency and save cost. The next big step we need to take is making faster payments an industry standard, and one that both investors and customers expect from responsible businesses.

Terry Corby, Chair of the Good Business Pays campaign

GoCardless has become the second corporate supporter for the Good Business Pays campaign. It follows Mastercard, the first big company to pledge its support when the campaign launched in May 2021.

This study reveals what many of us suspected: the problem of late payment is getting worse in the UK. This has not only created a £60 billion hole in our economy. It’s also impacting the physical and mental health of business owners around the UK, hundreds of thousands of whom are already facing the prospect of bankruptcy this year under the combined pressures of Covid-19 and Brexit. Tackling late payment will require both large and small businesses to change how they think about paying and getting paid. That’s why we support Good Business Pays.

Pranav Sood, VP Small Business at GoCardless

Small businesses are the backbone of our economy and this research highlights the grave importance of alleviating the cashflow issues associated with late payments. As the first large company to sign-up to the Good Business Pays campaign we continue to drive innovation in this sector by bringing flexible payment solutions to the market, ensuring small businesses can pay and be paid promptly.

Kelly Devine, Division President, Mastercard UK & Ireland, the first sign-up to the Good Business Pays campaign

Sectors hardest hit by late payment

The Good Business Pays research found the sector worst affected by late payment was professional services. More than a quarter of businesses (28%) report problems with customers paying late, followed closely by agriculture, mining and utilities (24%), then manufacturing and construction (22%).

By contrast, in the arts, entertainment & recreation sector, fewer than 1 in 10 (7%) of small businesses experience problems with customers paying later than their terms.

Poor payment practices are debilitating for both the small businesses affected and the economy as a whole. This research aligns with FSB’s own findings that paying promptly would save 50,000 small firms a year, add billions to the economy, and improve productivity through both efficiency and stopping small business owners having to chase payments. After the disruption caused by the pandemic, a key part of the economic recovery relies on small businesses being paid promptly, and Good Business Pays is a timely campaign to drive positive change.

FSB National Chairman Mike Cherry

In my role as the Small Business Commissioner I’ve witnessed first-hand the devastating impact late payment has on small businesses. That’s why I encourage more businesses of all sizes to sign up to the Prompt Payment Code, and why I’m happy to support the Good Business Pays campaign which complements the work of the Office of the Small Business Commissioner in striving to end late and slow payments, and helping small businesses thrive.

Philip King , Small Business Commissioner

Backed by Federation of Small Businesses, the CBI, manufacturers group Make UK, the BCC, IoD and the Creative Industries Federation, the Good Business Pays movement was launched in May 2021 to encourage the UK’s largest companies to fast track payments to small suppliers, helping them bounce back and inject vital capital into the economy. 

To find out more about the Good Business Pays principles, pledge support for the campaign  and explore the CEBR study, visit

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For media enquiries, please contact:

Claudia Wilson at Good Relations or 07385 392 394

About Good Business Pays

The Good Business Pays campaign launched on the 14th May 2021 to encourage the UK’s largest companies to fast track payments to small suppliers, helping them bounce back from the COVID-19 pandemic and injecting vital capital into the economy.

Small businesses are a growth engine for the UK economy, employing 61% of the private sector workforce (16.8 million) and generating 52% of turnover. Yet 50,000 go out of business each year due to cash flow problems.

Developed initially with the Federation of Small Businesses, the Good Business Pays campaign has been launched with support from the country’s other leading business groups including the CBI, Make UK, BCC, IoD and the Creative Industries Federation. Between them, these groups represent hundreds of thousands of UK businesses. The campaign has been set-up with support from the Banking Competition Remedies (BCR) fund.

Good Business Pays is calling on businesses to sign up and show their support. Small businesses are encouraged to share their experiences (bad and good) of payment practices. Large businesses are asked to adopt a set of pledges committing them to:

  1. Complying with the Prompt Payment Code principles;
  2. Exploring digital solutions that enable small supplier invoices to be paid when they need it;
  3. Providing access to data that helps drive the fast invoice payment agenda for small businesses;
  4. Making sure payment performance data is published as required by the ‘duty to report’ on large businesses;
  5. Undertaking a quarterly review of feedback from suppliers on payment performance.
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