Late Payments in the UK: A Systemic Risk to Business And How Organisations Should Respond

Executive Summary

Late payment is no longer a routine operational inconvenience for UK organisations. It is now recognised by the government as a systemic economic risk, contributing to business failure, reduced investment, and lost productivity.

As regulatory scrutiny increases and payment practices face greater oversight, organisations are being forced to reassess how they manage overdue debt. Informal credit control is no longer sufficient. Structured, compliant civil enforcement and possession enforcement strategies are becoming a core component of financial risk management.

This article outlines the scale of late payment in the UK, identifies who is most exposed, and explains why professional enforcement partners such as APD Civil Enforcement Services are increasingly essential.

1. Late Payments Are Now a Systemic Business Risk

In 2025, late payment has moved firmly onto the strategic risk agenda for UK businesses. Government research estimates that:

● UK businesses are owed approximately £26 billion in late payments at any given time

● Over 1.5 million businesses are affected annually

● Late payment contributes to around 14,000 business closures each year

● The wider economic impact is estimated at nearly £11 billion per annum Late payment is no longer confined to poorly managed firms or marginal sectors.

It is embedded within the UK’s trade credit culture and increasingly affects otherwise profitable, well-run organisations.

2. Which Organisations Are Most Exposed to Late Payment?

Exposure by Business Size Late payment risk varies significantly by organisation size:

● Micro and small businesses often have 4–5% of annual turnover tied up in overdue invoices

● Larger organisations face lower percentage exposure but much higher absolute sums, often exceeding £700,000 per affected firm Smaller firms, with limited cash reserves, can be destabilised by a single unpaid invoice.

Exposure by Sector

Certain sectors experience consistently high late payment risk:

● Construction and transport, where over 90% of firms report late payments

● Business services, which experience some of the longest payment delays

● Property, infrastructure, and local authority supply chains, where delayed payment is often structural rather than exceptional

For many organisations, late payment is not occasional; it is systemic.

3. The True Cost of Late Payment (Beyond the Invoice)

The financial impact of late payment extends well beyond the face value of the debt. Additional costs include:

● Staff time spent chasing overdue invoices

● Legal and recovery costs

● Borrowing expenses to manage cashflow shortfalls

● Factoring or supply-chain finance charges Collectively, these hidden costs are estimated to add around £7 billion per year to the burden on UK businesses.

Late payment also drives damaging strategic behaviour:

● Businesses avoid customers with poor payment records

● Hiring, growth, and capital investment decisions are delayed or abandoned

Late payment is therefore a strategic constraint, not merely an accounts issue.

4. A Toughening Regulatory Environment The policy landscape is tightening rapidly.

The government has stated its intention to introduce the toughest late payment regime in the G7, including:

● Shorter maximum payment terms

● Mandatory payment performance reporting by large organisations

● Enhanced powers for the Small Business Commissioner

● Introduction of the Fair Payment Code, replacing the Prompt Payment Code

For boards and senior leadership teams, this creates:

● Increased scrutiny of credit and payment practices

● Reputational and compliance exposure

● Pressure to demonstrate structured, auditable escalation processes

Late payment can no longer be managed informally without risk.

5. When Credit Control Ends, Enforcement Risk Begins

Many organisations delay escalation, hoping reminders or relationships will resolve non-payment.

Evidence shows this increases loss risk:

● The longer a debt remains unpaid, the harder it becomes to recover

● Insolvency risk increases over time

● Enforcement options become more complex and less effective Leading organisations now adopt defined escalation frameworks, with clear trigger points for professional

Civil Enforcement, High Court Enforcement, or Possession Enforcement where applicable.

6. Why Structured, Compliant Enforcement Matters

Improvised recovery approaches expose organisations to unnecessary risk. Poorly managed enforcement can result in:

● Breaches of civil procedure rules

● Reputational damage

● Complaints or regulatory scrutiny

● Reduced recovery outcomes

Working with a specialist enforcement partner enables organisations to:

● Maintain full compliance with civil and enforcement regulations

● Protect brand and stakeholder reputation

● Create an auditable enforcement trail

● Improve recovery rates through disciplined execution

In an increasingly regulated environment, enforcement must be treated as a governance function, not an afterthought.

7. Where APD Fits: Enforcement as Risk Management

APD Civil Enforcement Services provides professional, compliant debt recovery and enforcement across the UK mainland, supporting organisations operating under increasing regulatory pressure.

APD’s services include:

● High Court Enforcement of writs

● County Court Judgment (CCJ) acquisition and High Court upgrades

● Sundry Commercial Debt Collection

● Commercial Rent Arrears Recovery (CRAR)

● Business Forfeiture and Possession Enforcement

● Process Serving and Statutory Notices

APD differentiates itself through:

● Over 20 years of enforcement experience

● Certificated, ethical enforcement agents

● Strong recovery performance

● Bilingual English–Welsh capability

● End-to-end enforcement solutions without fragmentation

As regulatory scrutiny increases, organisations require enforcement partners who can demonstrate compliance, transparency, and control, not just recovery capability. APD provides a disciplined route from debt to recovery while protecting legal and reputational integrity.

Conclusion:

Treat Late Payment as a Strategic Risk Late payment is no longer a background issue for finance teams. It is a measurable threat to cash flow, resilience, and growth. As regulation tightens and scrutiny intensifies, organisations that adopt structured enforcement strategies, supported by specialist civil enforcement partners, are best positioned to protect financial stability, maintain compliance, and reduce long-term risk.

Key Sources Used

● DBT & OSBC – Late payments research: impact on UK economy (2024/25) – official study estimating £26bn outstanding, £11bn annual cost, 1.5m affected businesses, 14k closures per year, and 133m hours chasing debts. GOV.UK Assets

● GOV.UK – Late payments consultation: tackling poor payment practices (2025) – sets out the policy context, confirms the £11bn cost and 38 closures per day, and details proposed reforms, Fair Payment Code, and reporting rules. GOV.UK

● Coface – 2025 UK Payment Survey – shows 90% of UK companies experiencing late payments, average delay of 32 days, and sector-specific data on construction and business services. Coface

● Atradius – B2B Payment Practices Trends, United Kingdom 2025 – finds 51% of B2B invoices overdue and 7% of invoices written off as bad debt, with commentary on liquidity pressure. Atradius

● Credit Insurance News / Xero research (2023) – estimates the cost of late payment to UK small businesses at around £1.6bn in 2023. CIN

● FSB – Pay It Forward & related policy commentary – highlights long-standing concerns about late payment, closures and growth impacts on small businesses. FSB