According to Bibby Financial Services’ 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 deliberate
62% of SMEs say their customers are taking longer to pay in full than a year ago. More worrying, almost one in five businesses (19%) admit they have delayed paying their own creditors to protect their own cash flow.
Derek Ryan, CEO for North West Europe at BFS, flagged this as a particularly troubling development: businesses are not just struggling to pay, in some cases they are choosing not to, using payment delay as a financial management tactic. The knock-on effects spread risk across supply chains, compounding pressure 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.
Bad debt: the hidden cost of doing business
Late payment rightly attracts attention, and the Government has signalled it intends to act. Bad debt is a different and often overlooked problem. When businesses write off sums owed, they typically raise margins to cover the loss, pushing increased costs through the supply chain to everyone else. Unlike a slow-paying customer, a customer who cannot or will not pay at all is a permanent hit to your bottom line.
Demand for protection is rising
60% of all BFS’s new business prospects in 2025 opted to include Bad Debt Protection in 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.
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.
