The average small business is owed £24,841 in late payments according to research by accounting software provider Xero.On any given day, 78% of businesses are owed money outside of agreed payment terms.

The research was based on data taken from two million invoices issued by Xero’s UK small business subscriber base which showed that in August the average 30-day invoice was paid after 39.67 days, almost 10 days after payment is due. Furthermore, when reviewing overdue 30-day invoice payments the average late invoice was found to be paid 64 days after issue, more than double the payment term.

Edward Berks, EMEA Director, platform business at Xero, said “At a time when the world needs small business to succeed it’s estimated that 50,000 businesses in the UK fail each year because of cash flow issues. Our data shows the impact that this level of debt can have on small companies. Predicting working capital requirements still remains a challenge for small businesses and accessing finance remains expensive and time-consuming.”

‘But, it is increasingly critical that the government and industry takes the right steps to ensure that small businesses get paid faster. New measures to crack down on big business culprits and smarter technology to automate payments will all help to alleviate the pressure on small business cash flow.”

The industry with the highest percentage of invoices paid late was found to be transport, postal and warehousing, with 68% of invoices overdue over the last year, followed by electricity, gas, water and waste services (62%) and manufacturing (60%).

The small business sector posting the largest level of late payment was wholesale and trade, with an average of £42,989 owing, with financial and insurance services ranked at number six in a top table, with an average of £29,732 outstanding.

The department for business, energy and industrial strategy (BEIS) has been running a two-month call for evidence on ways to crack down on late payment to small businesses, which is scheduled to close today (29th November).

The top 10 small business sectors owed the most from late payments

Wholesale trade (£42,989)

Administration and support (£40,662)

Transport, postal and warehouse (£31,555)

Public administration and safety (£31,541)

Electricity, gas, water and waste services (£31,309)

Financial and insurance services (£29,732)

Manufacturing (£29,123)

Information, media and telecoms (£28,682)

Construction (£25,880)

Professional, scientific and technical services (£23,554)