New research from SME funder Bibby Financial Services (BFS) paints a concerning picture of the financial pressures facing UK businesses – and the numbers are moving in the wrong direction.
According to BFS’s latest SME Confidence Tracker, the average amount SMEs are owed in unpaid invoices has reached £66,770 – a 10% increase year-on-year. Meanwhile, 30% of SMEs have written off an average of almost £30,000 due to customer insolvency or payment default.
Payment delays are lengthening - and some are doing it deliberately
62% of SMEs say their customers are taking longer to pay in full compared with a year ago. Perhaps more worrying, almost one in five businesses (19%) admit they have delayed paying their own creditors in order to protect their own cash flow.
Derek Ryan, CEO for North West Europe at BFS, flagged this as a particularly troubling development: businesses aren’t just struggling to pay – in some cases, they’re choosing not to, using payment delay as a financial management tactic. The knock-on effects spread risk across supply chains, compounding pressure on businesses at every level.
Corporate insolvencies continue to rise
UK Government figures for February 2026 show corporate insolvencies for the month hit 1,878 – a 7% rise from January. Supply chain disruption is a contributing factor: one business owner cited Middle East shipping diversions pushing delivery times from 12 to 16 weeks, with every delay adding cost and, ultimately, driving further insolvencies.
Bad debt: the hidden cost of doing business
Late payment rightly attracts attention — and the Government has signalled it intends to act. But bad debt is a different and often overlooked problem. When businesses write off sums owed, they typically raise their margins to cover the loss, pushing increased costs through the supply chain to everyone else.
Unlike a slow-paying customer, a customer who can’t or won’t pay at all represents a permanent hit to your bottom line.
Demand for protection is rising
In response to these conditions, 60% of all BFS’s new business prospects in 2025 opted to include Bad Debt Protection as part of their funding package. Notably, SMEs are increasingly choosing to protect their entire sales ledger rather than selectively covering individual customers – a sign that payment risk is now seen as widespread, not isolated.
What this means for your business
If your aged debtor book is growing, waiting is rarely the right strategy. The sooner action is taken on overdue accounts, the greater the likelihood of recovery – and the less pressure on your own cash flow and supplier relationships.
STA International specialise in commercial debt recovery for businesses of all sizes. If you’re seeing payment delays lengthen or debts go cold, get in touch with our team to discuss your options.
Sources: Bibby Financial Services SME Confidence Tracker (2026); UK Government insolvency statistics, February 2026. This post was informed by reporting first published in Credit Connect on 9 April 2026.