Close to a third of UK SMEs lose nearly one full working day per month chasing overdue invoices, according to a new report, highlighting the persistence of the issue despite new government measures.

New research from Howden found that almost one in three SMEs receive late payments either often or very often, with over half facing late payments on at least an occasional basis. One in five respondents say that the problem has become worse in the past year.

Almost a third of businesses responding to the research reported spending over six hours each month - the equivalent of nearly one full working day - chasing overdue invoices. It is feared that this administrative burden is taking focus away from growth.

UK government data indicates that late payments are a factor in around 38 business closures every day. Howden research found that over a third of UK SMEs (34.5 per cent) are experiencing cashflow issues linked to delayed payments.

This is having a longer-term effect, too, with nearly one in seven saying that they have had to delay plans for investment or growth, with others deferring supplier payments or turning to credit facilities in order to sustain their day-to-day operations.

There are also potential impacts on employee satisfaction, staff retention and morale, with 4.3 per cent of SMEs reporting they have delayed wages due to cashflow issues.

Across the wider UK economy, research backed by the government has found that late payments cost the UK economy close to £11 billion each year.

The issue is leading many SMEs to make reactive, short-term decisions that could negatively affect long-term stability. Almost one in five say they have written off unpaid invoices entirely, one in ten rely on overdrafts or external credit and 6.4 per cent have delayed hiring plans.

Howden Managing Director - Commercial Robert Keene said: “Too many businesses are stuck reacting to late payments. Trade credit insurance changes that, giving businesses the insight to trade with the right customers, the protection when things go wrong and the support to avoid time-consuming debt recovery. Ultimately, it allows SMEs to focus on what matters most – growing their business with confidence.”