There is a quiet fiction in a lot of UK businesses. Late paying customers are framed as “important relationships” that just need a bit of flexibility. But on the ledger, they are something else entirely. They are unsecured borrowers using your cash flow to fund theirs.
In a low-insolvency environment with loose accountability around payment behaviour, you can sometimes get away with that. In 2026, the margin for error is far smaller.
The corporate insolvency numbers make the point clearly. The Insolvency Service recorded 1,671 company insolvencies in England and Wales in December 2025. That was down a little on the previous month and lower than the same month a year earlier. But the annual picture remains heavy. Across 2025, roughly one in 190 active companies entered insolvency. That is not a blip. That is a sustained level of distress.
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This matters because the sectors under pressure are the ones that sit on a lot of B2B ledgers: construction, wholesale and retail, hospitality, business services, and manufacturing. If you supply into those areas, long terms and repeated extensions are not just “commercial”. They are exposure.
At the same time, the policy landscape is shifting away from tolerance of strategic late payment. Legal updates suggest the government’s response to its consultation on late payment is imminent, and the proposed reforms are significant. A maximum 60-day payment term between businesses is on the table. There are proposals for a 30-day deadline to verify or dispute invoices. Statutory interest at 8% above the Bank of England base rate could become harder to avoid. The Small Business Commissioner could gain stronger powers, including penalties and binding arbitration.
For finance directors and credit control leaders, this combination changes the calculation. Every extension of terms, every tolerated delay, and every soft follow-up is a risk choice. It might feel harmless, until the customer fails and your invoice sits behind an insolvency practitioner, or until public reporting makes your late payment exposure uncomfortably visible.
A more realistic approach starts with one mindset shift: your debtor ledger is a loan book. Treat it like one.
Segment it properly. Who pays on time. Who is chronically late but fundamentally stable. Who is late because the business is under strain. Who operates in a sector where insolvency risk is rising. Once you have that view, it becomes easier to decide where flexibility is strategic and where you are simply underwriting someone else’s weak balance sheet.
Then make your process match your terms. If disputes must be raised quickly, your internal workflow should reflect it. If interest becomes more visible, you need a policy for how and when you apply it. Waiting until the relationship collapses is not a plan. It is a hope.
This is also where external recovery support can be a practical tool, not a panic button. When you hand over entrenched late payers at a defined trigger point, you change the dynamic. You signal that terms matter, you apply consistent pressure, and you free internal capacity to focus on prevention and better accounts.
The direction of travel is clear. Insolvencies remain high. Policy is bearing down on slow payment. In that environment, treating late payers as “good customers” just because they buy a lot is an expensive illusion. The businesses that thrive will be the ones that price credit risk honestly, enforce their terms, and act early when a customer starts treating them like a free bank
Your first step should be downloading our FREE ULTIMATE GUIDE TO DEBT COLLECTION, a comprehensive resource designed to help you navigate recovery with confidence. We’re here to look at your specific situation and give you the straight facts, even if that means advising you to cut your losses and focus on preventative measures for next time. If you’re looking for a partner to step in, you can easily request a transparent quote via our PRICING PAGE.