The UK tied with Singapore for slowest payments, compared with Brazil, where only 7% of invoices were paid late and Germany (9%).  In Ireland the proportion is 15% and 13% in the US, the research into over 3,200 small companies around the world found.

Globally, 10% of invoices are paid late, impacting SMEs to the effect of $3 trillion (£2.2 trillion).

This year, businesses in the UK are spending on average 15 working days chasing late payments, the research said.

The study identified a ‘domino effect’ whereby almost 40% of SMEs experience direct negative impacts from late payments. One in five say they will struggle to pay bonuses around the festive period, and 18% expect an impact on staff pay.

Other common impacts in the UK include delaying investment into the company (25%), and impeding the ability to pay its own suppliers in turn (25%), creating a vicious cycle.

Sage says analysis suggests the overwhelming reason for failure to tackle the problem is cultural, with 40% of those surveyed saying they do not tackle late payment in order to protect client relationships, indicating that there is a stigma around chasing payments.

Alan Laing, UK & Ireland managing director at Sage, said: ‘In 2017, it is totally unacceptable for 18% of all payments paid to SMEs to be paid late. Entrepreneurs rely on low cash reserves to operate, meaning delays to income can have substantial impacts; from stifling growth and creating unnecessary admin, to paying bonuses over the upcoming Christmas period.

‘It’s critical this stigma around chasing payments changes so small businesses feel they can chase without fear of losing repeat business. But perhaps even more importantly, we need the UK’s culture around late payments to change, so that small businesses can get on with doing what they love – running their business – rather than worrying about when the money will come in.’

Report by Pat Sweet