For many businesses, it has become such a common feature of trading that it is almost seen as normal but normal doesn’t mean acceptable. Systemic late payment culture is eroding trust between suppliers and customers while costing businesses billions in lost working capital.
Recent research commissioned by the Department for Business and Trade shows that at any one time UK firms are owed around £26 billion in late payments, with the average business affected carrying about £17,000 in overdue invoices. That’s money tied up in someone else’s account rather than being available to pay suppliers, invest in growth or manage cash flow. For larger organisations dealing with high volumes of invoices, these delays multiply quickly, leaving finance teams with a growing backlog of debts to monitor and chase.
The ripple effect of late payments
When payments are delayed, the impact doesn’t stop with the company waiting for the funds. Suppliers further down the chain feel the knock-on effect, and in some cases this creates a cycle where one late payment leads to another. In industries like construction, recruitment and logistics where cash flow is already stretched, this ripple effect can be enough to push otherwise healthy businesses into financial distress.
The government has tried to tackle the problem through initiatives such as the Prompt Payment Code and reporting obligations for large companies. While these measures increase transparency, the culture of late payment has proved stubbornly difficult to shift. Recent surveys suggest that many businesses still view holding back payments as a way of managing their own cash flow, regardless of the pressure it puts on their suppliers.
Why volume makes the problem harder
For firms with only a handful of debtors, chasing late payment can be a matter of sending reminders and following up personally. High-volume creditors unfortunately don’t have that luxury. Hundreds or even thousands of invoices can fall overdue in any given month and the administrative burden of monitoring, chasing and escalating them is significant.
This is where process really matters. We regularly see cases where outstanding invoices run into the hundreds. Finance teams can spend huge amounts of time sending reminders, updating spreadsheets and chasing calls, often with limited results. By the time debts are escalated, the debtor may already be in difficulty, reducing the chance of recovery.
In one example, a manufacturing client allowed overdue balances to stack up over several months because their internal team simply couldn’t keep pace with the volume of reminders. By the time they involved us, several accounts had already gone into insolvency, leaving tens of thousands unrecoverable. With a structured escalation process in place earlier, more of those overdue accounts could have been recovered.
The wider cost of delay
Late payments consume valuable management time, strain supplier relationships and in some cases, force businesses to borrow unnecessarily. Research commissioned by London Economics suggests that a staggering 14,000 UK businesses close each year due to late payments, put another way, that’s nearly 38 firms every single day. A direct example of how one company’s delay becomes another company’s crisis.
There’s also a psychological toll. Consistently chasing overdue accounts can erode morale within finance teams, especially when efforts appear fruitless. For larger firms, the reputational risk of being seen as a habitual late payer shouldn’t be underestimated either. Trust takes years to build but can be quickly damaged by persistent delays.
Building resilience against late payment culture
While systemic change is slow, there are steps businesses can take now to protect themselves:
- Segment your debtors. Not all overdue accounts carry the same risk. Identify high-value or high-volume clients and give them closer oversight.
- Set clear expectations upfront. Make payment terms visible in contracts and invoices, and avoid ambiguity around due dates.
- Automate where possible. Utilise technology to flag overdue accounts early and reduce manual admin.
- Escalate promptly. The longer a debt sits, the harder it becomes to collect. Build a clear escalation path that moves accounts forward after defined points.
- Track and learn. Monitor debtor behaviour to spot patterns. If a client consistently pays late, consider whether tighter credit control or revised terms are needed.
Our perspective
From our experience, late payment culture persists not because businesses are unwilling to pay but because many know their suppliers will tolerate delays. The firms that recover more of their money are the ones with structured processes that combine clear communication with timely escalation.
It's the reason we built Collections+. For clients managing large volumes of invoices, it's become the framework that keeps overdue accounts moving without overwhelming internal teams. The focus is simple: clear communication, timely escalation and visibility through regular reporting.
Our free eBook, Winning Solutions for High-Volume Debt Recovery, is available to download and offers practical advice for businesses managing a high volume of debts.
