Late Payments Cost Small Businesses Thousands, Fuel Recession Fears

Late customer payments are creating significant financial strain for small business owners, according to a new survey from Gateway Commercial Finance. The report found that 64% of small business owners currently have invoices more than 90 days overdue, with the delays accounting for 11% of their annual revenue on average.

The survey of 503 small business owners revealed that late payments are becoming more frequent, with 73% saying they’ve noticed an increase in overdue invoices over the past year. The financial toll is substantial—businesses estimate losing an average of $39,406 per year due to payment delays. Nearly one in ten respondents reported annual losses exceeding $100,000.

“These delays aren’t just inconvenient—they’re destabilizing,” the report notes. Among the surveyed businesses, 63% said a late payment caused them to miss a growth opportunity in the last year. Others said they had to postpone purchasing equipment or inventory (51%), delay vendor payments (43%), or fall behind on rent or mortgage obligations (34%).

In response, many small business owners are relying on personal finances. The survey found that 69% have dipped into personal savings or taken on personal debt to keep their operations running. Meanwhile, 29% said they feel less financially secure now than they did a year ago.

Despite this, only 76% described their current cash flow situation as stable. Of those, many said their businesses couldn’t survive more than a few months without incoming payments. Nearly a third of respondents said their company could only stay afloat for three to six months if payments stopped, while 2% said they would last less than a week.

Small businesses are seeking financing options to manage the gap, with many considering short-term loans (44%), credit cards (44%), or business lines of credit (38%). However, high interest rates (61%) and concerns about taking on debt (40%) remain major barriers.

Alternative funding methods like invoice factoring are also gaining interest. Still, 34% said the complexity of approval processes hindered their access to capital. The report noted that 71% of small business owners described their primary bank as supportive, but only a limited number had contingency plans in place—38% said they had none.

Gateway Commercial Finance conducted the survey in 2025, gathering responses from business owners across various industries, most of whom operated businesses with fewer than 100 employees.

This article, "Late Payments Cost Small Businesses Thousands, Fuel Recession Fears" was first published on Small Business Trends