It’s no secret that the UK economy is going through a tough time. Growth has averaged just 1.3%
over
the past decade, and figures for 2025 are equally poor, with the Office For Budget Responsibility (OBR) forecasting
a
rate of just 1%. This anaemic performance shows up in reduced consumer and business confidence, less investment, greater unemployment, and (as we shall no doubt see in the upcoming budget) higher taxes.
B2B payments: a £55.8 billion growth opportunity
Much of the debate on solving the UK’s growth crisis focuses on the urgent need to improve productivity, which lags the rest of Europe. However, there
are other elements to consider that could boost growth every bit as much. One particularly promising area is in improving corporate payments systems to release working capital for investment in growth and innovation.
The scale of this opportunity should not be underestimated. According to data from the ONS, approximately £558 billion worth of business-to-business
invoices sit unpaid at any one time. This is the result of the two-to-three-day lag in payments caused by outdated payment rails as well as the money set aside as liquidity buffers to reduce the risk of delayed payments.
By modernising payments systems and removing extra liquidity buffers (without touching 30-day payment terms), businesses would,
at a conservative estimate,
be able to reclaim 10% of that £558 billion. That’s a staggering £55.8 billion given back to UK firms for investing, hiring, training, innovating, and ultimately growing. To put that into perspective, the sum is equivalent to 2.3% of GDP and only a smidge
under the nation’s annual defence budget.
That’s quite the shot in the arm for our ailing economy.
A path to better corporate payments
And this is just the start. Our analysis of the ONS data suggests that UK businesses could access up to £167 billion of additional capital per year
if they took even bolder measures.
The first step is to optimise payments processes. Despite years of fintech innovation, many businesses today continue to struggle to support fast
and efficient payments due to embedded manual processes, poor (or no) integration between systems, and the use of legacy technologies. By streamlining workflows, automating manual tasks, and improving data exchange, organisations can process payments far more
efficiently. It all comes down to using modern, digital and data-centric technologies.
Next, corporates can achieve additional gains by introducing partial early payments. In this approach, enterprises make a portion of an owed payment
available before the full payment is due. For payers, this opens up the potential for supplier discounts and cost savings, better cash flow management, and increased supplier loyalty. Payees, meanwhile, benefit from improved liquidity and lower financial risk.
Finally, businesses should make it a priority to further reduce, or eliminate entirely, liquidity buffers. These excess liquidity buffers are a consequence
of inefficient payment systems and the associated risks of payment delays and uncertainties.
Making payment systems faster and more reliable means that businesses can reduce the amount of capital businesses hold in unproductive suspense or
nostro accounts. Indeed, with the latest payments systems businesses can have complete confidence in their transactions, meaning they can all but do away with liquidity buffers altogether.
Giving UK businesses a much-needed boost
For the enterprises concerned, there’s a clear competitive advantage to upgrading payments systems. After all, organisations that move first and fastest
in streamlining and automating their payment processes, while eliminating unnecessary payment buffers, will have considerably more financial firepower than their peers.
From the perspective of the UK economy, however, the more businesses that get involved the better. Regardless of whether it’s the conservative £55.8
billion or the more ambitious £167 billion that we think is achievable, improving corporates’ payments systems has the potential to add significantly to the UK’s growth agenda.
In the long run that will result in everything from better public services, a lower cost of living, and improved employment. What better motivation
could there be for bringing B2B payments into the 21st century?
