2025 Report: How late payments are costing businesses more than you think

For small business owners, late customer payments have become more than just a routine nuisance, they've become a systemic issue that chips away at the cash flow essential for running a business.

Small businesses represent 98% of all Hong Kong’s companies and contribute to 45% of national employment*. Therefore, any issue affecting them inevitably has a ripple effect on the broader economy.

When businesses face cash shortages, they often resort to alternative means to keep operations going, often stretching their already thin cashflow chains to breaking point. Beyond the financial strain, these ongoing delays can take a toll on the team’s morale, inhibit growth opportunities and create a cycle of administrative overload.

Additionally, these late payments make it harder to monitor and manage expenses, again disrupting the cashflow chain and squeezing the profit margins.

To understand the scope of this issue and spotlight its everyday impact on Hong Kong businesses, we conducted an in-depth survey exploring the current state of cashflow among small and medium enterprises.

In this article, we’ll share our findings, identify the leading causes behind a cashflow crisis and reveal how businesses are adapting to these challenges to survive in today’s landscape.

About the research

We surveyed 500 SME owners and decision-makers across Hong Kong to better understand the financial pressures they face, particularly around cashflow and how they’re navigating a landscape that’s increasingly being crippled by delayed payments.

What are the main reasons for a cashflow crisis among small businesses?

A consistent cashflow is the backbone of any business. When a company works to produce a product or service, it expects timely payment in return. That income is then used to pay suppliers, staff and operational costs. However, when payments are delayed or unexpected costs arise, the entire chain gets disrupted, forcing business owners to divert funds, delay investments or seek external financing just to keep the business running.

Of those surveyed, 96% of SME business owners and leaders admitted to experiencing a ‘cashflow crisis,’ with over half (52%) of those attributing this difficulty to a rise in operational costs such as wages, rent, energy bills and supplier fees.

Late customer payments were reported by over two-in-five (44%) respondents as a key contributor to their cashflow issues, while 43% said unexpected businesses costs, such as repairs, legal fees and tax bills, has made them experience a cashflow shortage when running their businesses.

How are SME owners managing the cashflow shortfalls?

When it comes to managing these cashflow shortfalls, businesses are turning to methods that may get them out of their current situation but are unsustainable in the longer run. Worryingly, over half (54%) reported dipping into their savings to stay running, indicating how personal and business finances are increasingly being intertwined.

Almost half (47%) of businesses said they’ve taken out business loans to cover gaps, while 42% are resorting to invoice financing to access cash tied up in unpaid invoices, demonstrating the need to access funds in a hurry.

Personal credit is named as the fourth biggest contributor to cashflow crises for Hong Kong SMEs, with 38% accrediting this to their financial issues. Meanwhile, 37% are relying on business credit cards, often with high interest rates and 22% of business owners have even borrowed money from friends or family to maintain operations.

How much financial loss are late payments causing the businesses?

Late payments have become a costly issue with businesses having to fill the gaps from their own pockets, often amounting to thousands of dollars each year.

According to the data, over two-in-five (41%) reported late payments cost them at least HK$2,000 each month - equating to HK$24,000 annually. Worryingly, 96% of Hong Kong SMEs lose up to HK$4,999 on a monthly basis because of delayed invoices, which means a staggering annual loss of HK$60,000 for those SME owners.

For businesses with a monthly revenue between HK$100,001 and $250,000, the average monthly loss climbs to HK$1,893 while for those earning more than HK$251,001 feel the biggest hit with an average loss of $2,753 per month.

When it comes to invoices, less than one in 10 (8%) said that all their invoices are paid on time. The rest are regularly chasing payments, with over half (56%) saying up to a quarter of their invoices are paid late and a further 29% reporting delays on 26-75% of their invoices.

What are SMEs doing to tackle the issue?

To manage the growing burden of late payments, SMEs are having to become increasingly proactive. While 13% of respondents said they never face overdue invoices, the vast majority do. Two-in-five (40%) said they occasionally need to chase a few overdue invoices each year and over one in 10 (11%) deal with at least one late payment every month.

Time is another hidden cost. On average, SMEs spend over four hours per month chasing payments. Almost three-in-five (58%) respondents reported spending one to five hours monthly on this task, while nearly three in 10 (29%) said it takes them six–10 hours per month.

When it comes to the strategies businesses use to recover overdue payments, the most common approach is a polite but persistent follow-up, with nearly 46% saying they send reminders and follow-up with calls or emails. Around 40% offer payment plans or revised terms and 42% enforce late payment fees or interest charges to encourage faster settlement. More serious action is also taken in some cases, with 36% resorting to legal action and 34% using collections agencies.

Worryingly, almost two-thirds (61%) occasionally write off unpaid invoices and 17% do so frequently. 

How Airwallex offers a solution to solve the cashflow crisis due to late payments?

For SMEs struggling with late payments and tight cashflow, Airwallex offers a practical solution. By providing multi-currency accounts, Airwallex enables businesses to receive and make payments in local currencies, helping them sidestep FX fluctuations and reduce unnecessary conversion fees. This is especially beneficial for companies with international clients or suppliers, allowing them to maintain smoother cashflow across borders.

In addition, Airwallex’s real-time expense tracking, borderless payment capabilities, and automated reconciliation tools help finance teams stay in control, freeing up time spent chasing paperwork and improving visibility over outgoing payments. For SMEs navigating delayed income, having a centralised platform to manage spend and pay suppliers efficiently can make a meaningful difference in preserving margins and keeping operations running smoothly.

Methodology

The research was conducted by Censuswide, among a sample of 500 SME business owners/leaders (aged 18+) in Hong Kong. The data was collected between 23.07.2025-01.08.2025. 

Censuswide abides by and employs members of the Market Research Society and follows the MRS code of conduct and ESOMAR principles. Censuswide is also a member of the British Polling Council.

Sources

* https://www.cedb.gov.hk/en/business-environment/sme-support.html