In most cases, the risk has been building incrementally through small delays or internal issues that slow payments down before anyone realises there’s a wider concern.
This matters because late payments are no longer an occasional disruption. Last year UK businesses paid more than £100 billion worth of invoices late, affecting organisations across every sector and size. What often looks like a one-off delay is usually part of a wider pattern.
Typically, the warning signs are already there. Extended payment terms, slow responses, repeated invoice queries or administrative errors can all indicate rising payment risk long before an invoice reaches its due date. Recognising these signals early allows businesses to address issues sooner and reduce the likelihood of formal recovery later.
This is where early prevention plays a critical role.
Early warning signs of payment risk
Early indicators of payment risk often show up in routine interactions, where small changes can signal that a payment may not arrive on time.
A shift in payment behaviour is often one of the earliest signs. This may involve changes to agreed terms or a gradual slowing in how invoices are settled, which can indicate that an account is becoming harder to manage or that payment is no longer being prioritised. One of our Account Managers here at Redwood Collections noted, “Asking for long periods of time to come forward with proposals is usually a clear sign for us. Another is missing deadlines and not responding to any correspondence.”
Changes in communication can also highlight risk. When responses become slower or less consistent and when routine queries begin to delay progress, it can suggest internal disruption or disengagement on the customer side. These issues often surface before any payment is formally missed. Another account manager added, “If a debtor massively overpromises but this is 50/50 as sometimes they do genuinely want to pay. You can usually hear the level of sincerity in their tone and those who want to pay will make an effort to provide regular updates on their situation.”
Internal processes can contribute to delays as well. Where invoicing is inconsistent or follow-up is unclear, payment issues can arise even with customers who intend to pay. Research from the UK Department for Business and Trade found that around 24% of businesses reported that administrative errors, such as incorrectly handled invoices, contributed to payment delays, reinforcing how internal issues themselves act as early warning signs if they’re not resolved promptly.
Recognising early indicators gives businesses the chance to intervene sooner and address potential problems before overdue balances begin to build.
What to do when early warning signs appear
When early warning signs emerge, timing matters. Acting at this stage gives businesses greater flexibility and can help avoid the need for firmer action later.
In many cases, reviewing the account in context helps clarify the situation. This may involve checking whether payment terms are still appropriate or confirming that invoices have been issued correctly, particularly where queries remain unresolved. Coface reported that nearly half of UK companies extended their payment terms over the past year, making it easier for delays to become embedded if expectations are not reviewed early. Clear communication at this point can prevent small issues from developing into more serious delays.
Where concerns persist after this review, early intervention can make a meaningful difference. Engaging with the customer before a deadline is missed, rather than waiting for non-payment to occur, helps businesses remain in control of the situation while relationships are still intact.
Relieving internal pressure before arrears escalate
The impact of payment delays was seen at a trusted construction business operating across the North of England. The company encountered a payment issue when a client failed to settle an invoice for a completed project, leaving the balance outstanding beyond expected terms.
As follow-up continued over time, the administrative effort involved in chasing the payment increased, placing growing pressure on internal resources and creating a cash flow risk.
With the issue continuing to absorb internal attention, the business sought external support to help recover the overdue balance. Involving a debt collection partner introduced a more structured approach, built on a full review of documentation and clearer communication around payment expectations.
As a result, the outstanding balance was recovered in full within two months, allowing the business to restore cash flow and relieve pressure on internal teams. While this situation was not approached as an early prevention case, it highlights how internal strain can build when payment issues persist, reinforcing the importance of recognising and responding to warning signs earlier.
How Redwood Collections supports early prevention
Our support typically begins with a review of payment terms and credit limits to ensure expectations are clear from the outset. We then advise on when concerns should be escalated and support clients by handling early-stage contact on their behalf, using appropriately timed, solutions-focused communication to address issues professionally and help reset expectations before balances become significantly overdue.
We also work with businesses to review longer-standing accounts or customers with irregular payment patterns, identifying whether changes are needed to prevent recurring issues. Throughout this process, the focus remains on maintaining control and preventing recurring payment issues from placing unnecessary pressure on your business.
When should you act?
If payment needs to be chased more than once or concerns begin to arise about a customer’s ability or willingness to pay, it’s often a sign that early warning indicators are already present and should be reviewed.
Acting at this stage protects cash flow and limits disruption, while reducing the likelihood of issues escalating into more complex problems.
If you’re noticing early signs of payment risk, you can visit our Early Prevention page to see how we support businesses at this stage, speak to our team on 020 8080 2888 or get in touch via our online contact form.
