When customers take longer to pay: five warning signs an overdue invoice is becoming a bad-debt risk

Recent research provides some context. Bibby Financial Services’ SME Confidence Tracker, based on responses from more than 1,000 UK SME owners and decision-makers, found that 60% said their customers were taking longer to pay than a year ago. Respondents were owed an average of £72,000 in outstanding invoices, rising to £143,000 among mid-sized businesses, while average bad debt had moved above £30,000.

These are survey findings rather than official national statistics, and payment behaviour will vary considerably between businesses and sectors. Nevertheless, they reflect a problem familiar to many finance teams: an invoice may begin as a routine delay but, without the right intervention,develop into a serious recovery risk.

So, how can you recognise when an overdue account may require more than another standard reminder?

1. The promised payment date keeps moving

There is an important difference between a customer requesting a reasonable extension and one repeatedly making payment promises that are not kept.

One missed date may have a straightforward explanation. Several missed dates, particularly without supporting information or proactive communication, may indicate that your invoice is being deprioritised or that the customer is experiencing wider cash-flow difficulties.

Credit teams should record every commitment and set a clear escalation point. If a promised payment is missed, agree exactly what will happen next rather than allowing the account to return to the beginning of the chasing process.

2. A previously reliable customer starts raising unexpected disputes

Genuine invoice queries should be resolved quickly. However, concern may be warranted when a customer who previously paid without difficulty begins disputing old invoices, requesting documents that have already been supplied or raising a succession of minor issues immediately before payment is due.

This does not automatically mean the dispute is invalid. It may expose a genuine breakdown in service, documentation or internal approval. The important point is to separate the disputed and undisputed elements, establish who owns the resolution and place a deadline around the next action.

Allowing an account to remain indefinitely marked as “in dispute” can hide a growing debt problem and weaken the prospects of recovery.

3. Communication becomes slower - or stops altogether

Changes in communication can be as significant as changes inthe balance owed.

A customer may stop answering calls, fail to respond to emails or provide increasingly vague answers. Your established contact may have left the organisation, or messages may begin bouncing back. In other cases,correspondence is repeatedly redirected between departments without anyone accepting responsibility.

Before assuming deliberate avoidance, verify that you hold accurate contact details and are speaking to someone with authority to resolve the account. Where a customer or responsible contact can no longer be located, tracing and data-verification services may help re-establish contact.

Continued silence after these checks is a strong reason to review whether external recovery is appropriate.

4. The customer’s financial or trading position changes

Payment behaviour should not be considered in isolation. Changes to company information, credit ratings, trading status, filed accounts,director appointments or payment patterns may indicate that an account requires closer attention.

Businesses should regularly review customers with large credit limits, significant overdue balances or a high concentration of ledger exposure. Monitoring does not predict failure, but it can give credit teams an earlier opportunity to reassess terms, reduce exposure or escalate overdue invoices.

Through identeco, businesses can access company credit information and monitor important customers for changes that may affect credit decisions. This supports the preventative side of credit management, while Controlaccount can assist when an invoice has already become overdue.

5. Your exposure continues to grow while older invoices remain unpaid

One of the clearest warning signs is a customer continuingto place orders or use services while earlier invoices remain outstanding.

The individual invoices may appear manageable, but the total exposure can increase quickly. This is particularly risky where a substantial proportion of your ledger is concentrated with one customer or group of connected companies.

Credit limits should operate as meaningful controls rather than figures that are repeatedly overridden. Review the customer’s total exposure, not just the oldest invoice, and make sure sales, operations and finance understand when further supply requires approval.

When should an overdue account be referred for recovery?

There is no single number of days that is right for every business. The appropriate point will depend on the agreed terms, the customer relationship, the reason for non-payment and the value and nature of the debt.

However, external support should be considered when:

•             internal reminders are no longer changing the customer’s behaviour;

•             agreed payment dates have been missed repeatedly;

•             the customer has stopped engaging;

•             the undisputed balance continues to increase;

•             changing credit information suggests greater risk;

•             the account is consuming disproportionate internal time; or

•             your own team is reluctant to escalate because of the commercial relationship.

Early referral does not have to mean immediate legal action.A specialist recovery partner can establish contact, clarify the reason fornon-payment, address straightforward queries and seek payment or an appropriatearrangement. Legal escalation should be considered separately and only whereproportionate.

Why acting earlier matters

The longer an account remains unresolved, the more difficult recovery can become. Contact information may become outdated, personnel may leave, evidence can be harder to locate and the customer’s financial position may deteriorate.

Meanwhile, the unpaid balance remains unavailable for wages,suppliers, investment or growth. Using the Bibby survey figure as an illustration, £72,000 tied up in overdue invoices is £72,000 that the business cannot deploy elsewhere until its customers pay.

Acting earlier gives both parties more options. It createsan opportunity to resolve administrative problems and genuine disputes whilethe information is current—and to intervene before a manageable delay becomes asubstantial bad-debt exposure.

Supporting your credit-control team

Controlaccount has supported businesses with debt recoveryand credit management for more than 45 years. We work with organisationsranging from SMEs to global brand names, providing pre-legal recovery, tracingand legal escalation where appropriate.

Our debt-recovery service operates on a no collection, no fee basis, helping clients introduce specialist support without adding a fixed recovery cost. We can review the profile of an aged ledger and help identify which suitable accounts would benefit from referral.

If your customers are taking longer to pay, the right timeto review your exposure is before those balances become significantly aged.

Contact Controlaccount to discuss your overdue accounts andthe most appropriate next step.

Source

Credit Connect: Six in ten businesses say customers are taking longer to pay than a year ago, 2 October 2026

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