421,800 pounds. That is what the average organisation surveyed by Marsh now spends each year collecting money it has already earned, invoiced and legally become entitled to. The figure appeared in a trade credit report published on 24 August 2026, and it is up from 368,400 pounds the year before, a rise of 14.5% in twelve months.
Sit with that for a moment. Not the cost of winning business. Not the cost of delivering it. The cost of persuading customers to hand over money that was never in dispute.
Almost no business knows what that number is for itself, and the reason is mundane rather than sinister. Collections cost does not exist as a line in a management account. It is spread across credit controller salaries, accounting software subscriptions, solicitors’ letters, bank charges on delayed receipts, the finance director’s Tuesday afternoon spent on a single escalation, and the overdraft interest incurred because the cash arrived in October rather than August. Every one of those is recorded somewhere. None of them are added up. So the total never gets scrutinised, never gets benchmarked, and never triggers the question a cost of that size ought to trigger, which is whether the current approach is working.
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What the same fortnight’s data says about why the cost is rising
The Marsh report gives part of the answer. 85% of the organisations surveyed said they had dealt with more late payments over the previous twelve months. 75% reported more bad debt write-offs. Three quarters had experienced actual financial losses from each. Around seven in ten said their exposure had increased across supply chain disruption, economic conditions, digital disruption and late payment, and similar proportions expected it to increase again.
The rest of the answer arrived three days earlier, from a different source entirely. On 21 August, BTG released its Q2 2026 Red Flag Alert, which found 53,756 UK businesses in critical financial distress, 9% more than in the same quarter of 2025, alongside 674,030 in significant distress. All but one of the twenty-two sectors it monitors registered an annual increase in critical distress. Consumer-facing sectors led: leisure and cultural activities up 27.1%, hotels and accommodation up 26.6%, sports and health clubs up 21%, food and drug retailers up 18.4%.
Two supporting figures in that release deserve more attention than they received. Ministry of Justice data showed 6,411 winding-up petitions in 2025, a 15.7% rise on 5,543 the year before. And a Freedom of Information request submitted by BTG established that His Majesty’s Revenue and Customs (HMRC) was owed roughly 27 billion pounds in Corporation Tax, Value Added Tax and Pay As You Earn at the end of 2025.
Why the tax number should worry trade suppliers specifically
Since December 2020, HMRC has ranked as a secondary preferential creditor in respect of VAT, PAYE and employee National Insurance that a company has deducted but not paid over. That places it above floating charge holders and considerably above unsecured trade creditors in the distribution of an insolvent estate.
So a 27 billion pound arrears position is not simply a fact about public finances. Wherever a portion of it sits with a company that later fails, it sits ahead of the invoices raised by that company’s suppliers. The waterfall has been redrawn, quietly, and most suppliers have never adjusted their expectations of recovery to match.
Combine that with a 15.7% rise in petitions and the shape of the problem becomes clear. More creditors are running out of patience. More overdue tax is accumulating in front of you. And BTG’s own view, given that insolvency rates typically lag distress, is that failures are likely to rise during 2027. The write-off a business books eighteen months from now is being manufactured today, in the credit limits it approves this quarter and in the number of weeks it allows an invoice to age before anyone escalates.
The confidence problem
Here is the part of the Marsh findings that is genuinely odd. Alongside all of that loss experience, confidence in organisational resilience was described as exceptionally high.
Ian Leslie, who leads trade credit at Marsh Risk, put his finger on it: the real risk in many organisations is complacency, because when late payments and supplier instability become familiar, businesses stop treating them as signals to reassess protection.
That is worth stating more bluntly. A business that has absorbed twelve months of worsening payment behaviour without a crisis does not conclude that it has been lucky. It concludes that it is robust. The absence of disaster is read as evidence of strength, when it may only be evidence that the largest customer has not failed yet. On average, respondents put 39% of revenue at risk from the failure of a single customer among their top five. A quarter put more than half of revenue at risk. Those are not resilient positions. They are unexamined ones.
Four things worth doing before the end of the quarter
None of what follows requires new software, a consultant or a board paper.
Add up your collections cost. Take twelve months of credit control salaries, system costs, legal and agency fees, and a fair estimate of senior time spent chasing. One figure, one page. Whatever it comes to, compare it against what you actually recovered and how long it took. Most finance directors are surprised, and the surprise is the useful part.
Run a top-five failure test. Model each of your five largest customers failing to pay, one at a time, and express the result as a percentage of revenue. If any single name puts a material share at risk, that is a credit limit conversation, not a sales conversation.
Check where you rank, not just whether they will pay. Look at whether a customer is likely to be carrying tax arrears, whether there is a floating charge registered at Companies House, and how long its filings have been overdue. Those three checks are free and they tell you more about your likely recovery than a credit score does.
Shorten the clock. Decide in advance what happens at day 30, day 45 and day 60 past due, write it down, and follow it regardless of who the customer is. Discretion in escalation policy is how the largest and slowest payers end up being treated the most gently, which is precisely backwards.
The point most businesses miss
There is a persistent belief in British business that chasing hard damages relationships. It is worth examining that belief rather than inheriting it.
A customer who pays you sixty days late while paying others on time has already made a decision about your relative importance. Escalating does not create that decision, it reveals it. And in a market where petitions are rising and preferential claims are growing, the creditors who convert patience into process are the ones being paid from a company that still has money, rather than from a liquidator’s distribution eighteen months later.
Statutory interest and fixed compensation under the Late Payment of Commercial Debts (Interest) Act 1998 exist for exactly this purpose, as does a properly drafted recoverable costs clause in your terms. Statutory demands, litigation and winding-up petitions sit further along the same road, and they work, provided the debt is genuinely undisputed and the process is used properly rather than as a blunt collection tactic.
The businesses spending 421,800 pounds a year on collections are not doing anything wrong. They are simply spending a great deal of money on the least effective part of the process, which is the chasing, and comparatively little on the part that changes outcomes, which is the timing.
If your position in the queue is something you have never actually worked out, this is a reasonable place to start: our article on why the creditor who shouts loudest normally gets paid first sets out how statutory demands work, when they are appropriate, when they are emphatically not, and why the order in which creditors act so often decides the order in which they are paid.
Downloading our FREE ULTIMATE GUIDE TO DEBT COLLECTION is a good first step. If you want a tailored view on your specific debt, we are happy to give you the straight answer, even if that means advising against legal action. If you’re looking for a partner to step in, you can easily request a transparent quote via our PRICING PAGE.
A short conversation early on can prevent months of delay and avoidable cost later.