With the rise in late payments, businesses face immediate disruption to their ability to pay suppliers, meet payroll and cover essential operating costs. Due to the conflict in the Middle East, UK interest rates have risen beyond previous forecasts and businesses now need to plan for the possibility of further rate increases to ensure essential costs remain covered. Bank of England reported that inflation hit a significant 3.75% in December 2025, which reversed the positive trend many expected inflation to follow. When costs continue to rise without warning, forecasting becomes harder to rely on and overdue invoices add further burden by disrupting the cash needed to cover essential spending.
The reality of teams delaying referral
Our recent internal data over the past 6 months shows that 74% of accounts progressed through collections without any formal dispute. Despite this, referral still gets delayed in case a dispute arises.
We regularly hear clients ask what happens if a balance is disputed, creating hesitation that delays the early prompts needed to keep payment on schedule. The reality is, the longer overdue accounts stay in‑house, the harder they are to recover because the debtor assumes escalation won’t happen. Our latest findings support this , showing that 52% of our cases are recovered within the first 60 days. After 190 days, the recovery rate drops to 29%. These figures show what happens once our recovery process starts, not accounting for how long the overdue funds were outstanding before they’re in our hands, reinforcing that referring an overdue payment earlier may see better results.
A common reason teams hold back from referring overdue accounts is the fear of damaging customer relationships. This concern is usually raised when the customer has a long trading history or a record of previous reliability. Clients often share with us fear of escalation creates tension or reduces future opportunities, but this assumption delays action on overdue balances. Anticipating a dispute creates hesitation, putting escalation on hold because teams wait for a problem that hasn’t been risen. A lack of recovery structure undermines accountability when follow-ups become inconsistent, signalling to debtors that delays have no consequence and payment is optional.
How proactive teams stay in control
Recent research from Coface shows 90% of UK businesses experienced late payments in 2025, with 44% also stating that delays are becoming more frequent. Operationally, this turns routine cash management into a daily challenge, creating knock‑on effects like delayed supplier payments, tighter payroll windows and reduced flexibility on essential spending. It underlines how widespread the issue has become and why it’s important for finance teams to tighten their credit control processes to withstand rising overheads.
The most stable finance teams we work with are protecting their cash flow by building the following steps into their everyday collections process:
- Setting clear terms from the start to ensure customers understand what’s expected and sticking to it.
- Reaching out earlier, before an invoice becomes overdue, keeps the pace of payment in the business’s hands, not the customer’s.
- Reviewing supplier costs by cutting back on anything that’s not delivering value and locking in fair rates where possible.
- Escalating when needed by acting before in‑house efforts have run their course and recovery becomes harder.
Internal efforts can only go so far
Even well organised finance teams eventually reach the limits of what they can manage in-house. Federation of Small Businesses noted in their ‘Time is Money’ report that one member described how “sometimes we experience a squeeze with cash flow,” resulting in “having to stretch payments to our suppliers, creating a domino effect.” Finance teams are stuck chasing overdue invoices while still trying to meet their own supplier deadlines. As unpaid invoices remain unresolved, the time they need to manage cash flow gets taken up by chasing payments, causing delays in their usual work.
According to UK Government’s Department for Business & Trade, UK businesses are currently owed more than £23 billion in late invoices, intensifying the day to day demands on operations and cash flow. This limits the cash available for hiring, training and responding to changes in their market. When investment slows, competitors can strengthen their teams, improve their offering and secure opportunities that others are not in a position to pursue.
Recognising when a balance needs to be referred is key to maintaining the business’s long‑term financial stability.
Delaying action is costly
As overdue balances age, it becomes increasingly difficult to resolve. Key information gets buried under newer outstanding invoices, earlier agreements are harder to verify and the debtor’s focus moves to more recent commitments. Teams that act early are better positioned to safeguard funds required to support ongoing and upcoming development. When internal efforts are exhausted, our Collections service offers a structured recovery route that removes the ongoing chase from in‑house teams and helps strengthen cash flow.
