BoE Base Rate: 4.50% (since 6 February 2025)

My Customers Take 60-90 Days to Pay

You're not alone. The average UK B2B payment term is 37 days, but in construction it's 49 days, and in practice many businesses wait 60-90 days. That gap between delivering work and getting paid is the single biggest cash flow problem for UK SMEs. It cost UK businesses an estimated £684 million in 2024 just in late payment charges and interest.

There are a few options, but the most direct solution is invoice finance — you hand over the invoice, the provider gives you 70-95% of the value within 24 hours, and you get the rest when your customer eventually pays. The cost is typically 0.5-3% of the invoice value.

Your Options, Ranked

1. Invoice finance (best for most businesses)

Get 70-95% of every invoice within 24 hours. Scales with your business — the more you invoice, the more funding you get. Costs 0.5-3% of invoice value. No property security needed.

Best if: you invoice £50,000+/year to B2B customers on credit terms.

2. Negotiate shorter payment terms

Free, but difficult in practice. Large customers and main contractors set the terms. You can offer early payment discounts (2/10 net 30) but this costs you 2% — similar to factoring anyway.

Best if: you have negotiating power and your customer relationship is strong.

3. Business overdraft

Cheaper if you can get one (3-8% EAR), but banks are increasingly restricting overdraft limits. Fixed ceiling doesn't grow with your business. Can be recalled at any time.

Best if: you already have one and it covers your typical gap.

4. Business loan

Provides a lump sum, but you're paying interest on the full amount regardless of whether you need it. Doesn't solve the recurring problem — when the loan runs out, the cash flow gap returns.

Best if: you need a one-off injection, not ongoing working capital.

5. Chase harder

You can send reminders, charge late payment interest (8% + base rate under the Late Payment of Commercial Debts Act), or use a debt collection agency. But this takes time, damages relationships, and doesn't help with the immediate cash gap.

Best if: customers are paying beyond agreed terms, not just long terms.

The Real Maths

Scenario: You invoice £30,000/month on 60-day terms

Without invoice finance: you have £60,000 constantly tied up in unpaid invoices. That's cash you can't use for payroll, materials, rent, or growth.

With invoice finance (85% advance, 1.5% fee): you get £25,500 within 24 hours of each invoice. The fee is £450/month.

Question: is £450/month worth having £25,500 available immediately instead of waiting 60 days?

For most businesses, yes — especially if that cash lets you take on more work, pay suppliers on time (and get their early payment discounts), or simply sleep at night.

Industries Where This Is Worst

Some industries have structurally long payment terms. If you're in one of these, invoice finance isn't a crutch — it's standard practice:

OM

Oliver Mackman

Director, Market Invoice

Oliver leads Market Invoice's editorial and comparison research. With a background in UK commercial finance, he oversees provider analysis, rate verification, and industry reporting across all verticals.

Last reviewed: 5 April 2026

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