How to Reduce the 86 Hours Small Businesses Spend Chasing Invoices

Small businesses spending hours and hours on chasing unpaid invoices can be frustrating and cause delays in other business areas. Companies House reports that affected businesses spend an average of 86 hours pursuing overdue debt.

Those late payments don’t just create extra admin; they put pressure on cash flow, making it harder to plan ahead as a business.

In this article, we explain the impact of chasing invoices, what businesses can do to reduce this problem and the measures to be taken by the government to help support this ongoing issue and offer steps in the right direction.

Impact of Chasing Invoices

For many small businesses, the impact of having unpaid invoices goes far beyond delayed income. The missed costs, time, effort and opportunities can all add up. Rather than focusing on productive tasks for the business, it can get overlooked by having to make phone calls and send follow-up email for invoices that haven’t been paid.

Cash flow

Late payments cause trouble with a company’s cash flow and can affect their overall stability. Some of the smaller businesses that rely on steady income become even more vulnerable, causing a financial risk.

It’s important to remember that having a steady cash flow is the lifeline of any business.

Repeat Behaviour

Constantly chasing invoices for late payments can also become a pattern that gives the client opportunity to pay late. This can cause a cycle as deadlines then become seen as flexible, which is not want you want.

Having clear expectations from the beginning and a process set in stone will help prevent late payments being a repeat behaviour.

Recovery

Recovering from late payments can take a long time, especially when a business has no room for financial error. Having to wait for payments means other areas in the business could suffer, resulting in cutting back on spending and other consequences.

The longer payments are delayed, the harder it can be to recover back to being in a stable financial position.

What to Do to Prevent Late Payments

Avoiding this problem starts with putting practices in place to demonstrate invoices need to be paid on time.

Clear Payment Terms and Timeline

A good starting point would be focusing on making expectations clear before the work begins. The clearer they are from the start, the less room there is for any excuses later down the line. Making a customer aware of the terms and timeline at the beginning is key to have them follow this process each time an invoice is expected.

Same-Day Payments

Having same day payments will help you  stop chasing late invoices. It will help to remove unnecessary time between doing the work, sending the invoice and then getting the payment over. Having a same day payment through instant methods, like a bank transfer, means the invoice can be paid as soon as the work is completed.

Upgrade Accounting Tools

Upgrading your accounting tools will also stop the cycle of having to chase for unpaid invoices.

Modern payment tools will help with generating and sending invoices, as well as having the ability to send payment reminders before and after the due date. It will help if someone hasn’t paid on time, meaning you don’t have to manually chase, and will also be quicker to get an overview of which invoices have been paid and which are overdue.

Having accounting tools in place, can take the stress away from invoice chasing, giving employees more time to focus on day-to-day tasks.

Deposits for Larger Jobs

For any larger jobs, it’s best to not wait till the end of the project to receive all of the money. Having a deposit structure right from the start will help protect the company’s cash flow while the project is taking place.

It’s a useful set up that doesn’t cause a problem before it becomes a late payment issue.

Measures To Be Taken By The Government

The government introduced the Commercial Payments Bill in May 2026, which is currently moving through parliament. Its aim is to strengthen payment practices and give small businesses better protection when dealing with chasing invoices.

Some key measures include:

• 60-day payment cap – Payment periods of more than 60 days will be reducing to 45 days over 5 years.
• Statutory interest – Late payments will automatically have a statutory interest at 8% above the Bank of England base rate, making late payments a more costly practice for businesses.
• Invoice deadline – A set 30-day deadline for disputing invoices.
• Small Business Commissioner – The Small Business Commissioner will be able to fine businesses with poor payment records or who persistently fail to sort late payment obligations

Helping Small Businesses Move Forward

Sometimes late payments can’t always be controlled, but with businesses potentially spending up to 86 hours a year following up on invoices, late payments do add a lot of pressure on them, making it harder to recover from each one.

A helpful next step would be to create a payment process that frees up hours spent from sending payment reminders, allowing the business to continue running and growing.