Media releasePublished on 27 October 2022

Late payments for small businesses hit a two-year high

Xero’s data shows spike in payment times and slow sales growth for small business

London — 27 October, 2022 — Payments to small businesses were made on average 8.2 days late in September. This is the highest late payment time since August 2020 according to the latest data from Xero, the global small business platform.

Xero's Small Business Index, based on anonymised and aggregated data from hundreds of thousands of small businesses, found that in the UK invoices are paid significantly later than they are in Australia (6.5 days) and New Zealand (6.2 days).

In September, small businesses waited an average of 30.6 days to be paid by their customers – an increase of 0.6 days compared with August. This represents the longest payment times for two years, putting growing pressure on cash flow and their ability to pay staff and rising bills.

We urge our new Government to ensure that hard-working owners of small businesses are protected.

Alex von Schirmeister, UK Managing Director

Alex von Schirmeister, UK Managing Director, Xero, said: “The reversal of the tax measures announced in the last Government’s mini-budget has left small businesses in limbo at a time when they need stability. It’s critical that they are paid on time so they can manage their cash flow and handle rising costs. We urge our new Government to ensure that hard-working owners of these small businesses are protected.

“We need to see tougher penalties for those big businesses flouting agreed payment terms, and policies implemented that require more transparency in regulation and reporting around late payments.”

Overall, the Xero Small Business Index fell to 87 points in September. This is the lowest reading of the UK index since February 2021, as small businesses continue to battle late payments and slow sales growth.

Stark sales figures for the retail industry

As living costs soar, and consumers have less money to spend, sales growth slowed to the lowest in over a year, rising just 3.6 percent year-on-year (y/y) in September - the smallest rise since February 2021. When stripping out the price impact using the ONS Consumer Price Index (CPIH) of 8.8 percent y/y, sales volumes actually fell by 5.2 percent y/y as the rising cost of living continues to impact families and businesses in the UK.

The retail sector continues to be disproportionately impacted by these factors. Small retailers recorded their fourth consecutive monthly decline in sales (-7.4% y/y), as consumers cut back spending.

Job decline continues to impact business

The number of people employed by small businesses fell by 4 percent y/y – the sixth consecutive monthly decline. London’s small business community was the only region with more jobs compared with September 2021, up by 3.4 percent y/y.

The weak job market remains centred on industries that traditionally employ large numbers of people, including manufacturing (-8.2% y/y) and construction (-7.4% y/y). Despite the manufacturing sector recording the largest decline in jobs, it did have the largest wage gains (+5.9 y/y), suggesting these businesses are having to offer more money to attract scarce skilled staff.

More information on the September metrics is available here.


Media Contact

Xero UK | Clemmy Perlmutter | Senior Communications Manager | +44 (07779) 982378 |

About Xero

Xero is a global small business platform with 3.3 million subscribers which includes a core accounting solution, payroll, workforce management, expenses and projects. Xero also provides access to financial services, and an ecosystem of more than 1,000 connected apps and more than 300 connections to banks and other financial institutions. Through Xero’s open platform, small businesses can connect to a range of solutions that help them run their business and manage their finances. For three consecutive years (2020-2022) Xero was included in the Bloomberg Gender-Equality Index. In 2021, Xero was included in the Dow Jones Sustainability Index (DJSI), powered by the S&P Global Corporate Sustainability Assessment. Xero has been named as a FIFA Women’s Football partner under FIFA’s new commercial structure.

For all media enquiries, please contact the Xero media team.

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