Cost of delay: what waiting costs a small business

Key takeaways

Cost of delay is the value a business loses for each week a piece of work is not finished. In-house teams with full diaries delay constantly, because projects wait behind the day job. Pricing the delay per week turns a vague frustration into a number that can be compared with the cost of getting help.

• Cost of delay = value per week x weeks waited.
• A project worth £20,000 a year costs about £385 for every week it waits.
• A 12-week delay on that project costs about £4,600.
• Rank work by cost of delay divided by effort, and do the highest first.

What is cost of delay?

Cost of delay is the economic impact of finishing something later than it could have been finished. It is expressed as value per unit of time, usually pounds per week. It applies to projects, such as a new website, and to routine work, such as invoices or quotes that go out late.

• The hidden costs of doing everything in-house
• Important but not urgent: the work that never gets done

How do you calculate it?

Calculate cost of delay by estimating the yearly value of the finished work and dividing by 52. A change expected to bring £20,000 a year in extra margin is worth about £385 a week. Twelve weeks of waiting costs about £4,600, whatever the reason for the wait.

For invoices, the calculation is about cash. Invoices sent a week late are paid a week late, and under UK late payment legislation you can charge statutory interest on overdue business debts only once they are actually overdue.

• Estimate the yearly value in extra margin or saved cost.
• Divide by 52 for a weekly figure.
• Multiply by the weeks the work has waited or will wait.

Why do in-house teams delay so much?

In-house teams delay because project work has no dedicated capacity. It is given to people with full-time jobs, to be done when things are quiet. Things are never quiet. A website refresh planned for a month takes a year because it only moves in the gaps.

• Side of desk projects: why they stall and what it costs
• A growing work backlog: when it means outsource

How do you use it to prioritise?

Use cost of delay to rank the queue. Divide each item's weekly cost of delay by the weeks of effort it needs, and do the highest ratio first. Short, valuable jobs jump ahead of long, marginal ones, which is rarely the order a busy team works in.

• The cost of missed deadlines for a small business

When is delay the right choice?

Delay is right when waiting gives you information that changes the decision, or when the work's value is genuinely low. Not everything in the queue deserves to be done. Pricing the delay often shows that half the list can be dropped.

• A stop doing list for your business

What kinds of delay cost the most?

Delays cost most where value is lost permanently instead of merely postponed. A late quote loses the job outright. A late invoice only delays the cash. A postponed price rise loses margin on every sale made in the meantime, and that margin never comes back.

• Permanent loss: enquiries, quotes, seasonal offers, price changes.
• Deferred value: invoices, internal reports, non-urgent fixes.
• Compounding loss: recurring errors, unrenewed marketing, staff vacancies.

How do you compare delay with the cost of extra capacity?

Put the two figures side by side. If a stalled project is worth £385 a week and needs 40 hours of work, buying those hours at an indicative £14 an hour costs £560. That is less than two weeks of delay. The same sum shows when not to act: a project worth £20 a week does not justify paying anyone to rush it.

What mistakes do businesses make with queues?

The usual mistake is to work on whatever is loudest or oldest. Neither is the same as most valuable. A second mistake is starting everything, so that ten items are each one tenth done and none delivers. Finishing one valuable item completely before starting the next reduces total delay even though it feels slower.

What does this look like in practice?

A pattern we see with quotes: a firm takes five working days to send a quote because the one person who prepares them is also on site. Competitors reply in one. The delay is invisible in the accounts and obvious in the win rate.

• Slow response to enquiries: what it costs and the fix
• See client work
• BPO Solutions for UK businesses

Cost of delay checklist

Apply this to your current queue.

• List every piece of work that is waiting.
• Estimate each one's yearly value.
• Convert to a weekly cost of delay.
• Estimate effort in weeks.
• Rank by weekly cost divided by effort.
• Find capacity for the top two.

• The hidden cost audit: score your business in an hour

Next step

Send us your queue of stalled work. We will help you price the delay on each item and rank them in a 30-minute call.