More businesses are paying late – a sign that cash flow pressure is spreading through the economy.
Late payments between businesses have climbed to their highest level in six years, according to commercial credit agency CreditorWatch.
Payment behaviour is often a leading indicator. Long before insolvencies rise, businesses tend to stretch payment terms, hold onto cash for longer and delay settling invoices.
What’s driving the pressure?
CreditorWatch says many businesses are facing a three-way squeeze:
- Higher interest rates are increasing debt costs.
- Inflation and energy prices are lifting expenses.
- Softer demand is making it harder to pass those costs on.
Global uncertainty is adding another layer of pressure, with higher fuel costs flowing through supply chains and operating expenses.
Where to focus
Businesses that regularly review receivables, payment terms and funding arrangements are often better placed to navigate periods like this.
For borrowers, it’s also a reminder that access to finance can be most valuable before cash flow becomes a problem.
Businesses are often in the strongest position to secure finance before cash flow issues become serious. Get in touch if you’d like to review your options while conditions remain manageable