Debt recovery: don’t let late payments sink your business

Fixed fee debt recovery can help businesses recover monies owed swiftly and professionally without unpredictable legal costs.

Unfortunately, these are challenging times for many businesses who are seeing rising costs. At the same time, consumer sentiment has made it hard to pass increases on to customers. That means that even one late payment can tip them into difficulty.

Kayleigh Whitman, Partner and Head of Commercial Dispute Resolution, shares her advice for firms facing this squeeze in Cornwall and the South West.

The impact of late payments on small businesses

With the region’s SME-dominated economy, the impact of unpaid invoices runs deeper than temporary cashflow issues. In certain cases, it can spell the difference between survival and insolvency making debt recovery all the more important.

In our experience supporting clients, we’ve seen payment delays affect investment plans and growth, pushing businesses into unwanted and expensive borrowing or overdrafts to stay afloat.

Latest data from the Office for National Statistics shows, on average this year, more than 2,000 businesses in England and Wales entered insolvency each month, up to June 2025. New research published by the Department for Business & Trade and the Small Business Commissioner paints the clearest picture yet of the impact of late payments on small businesses.

• Delayed payments cause 14,000 businesses to close each year (equivalent to 38 businesses every day).
• Late payments are estimated to cost the UK economy about £11bn per year.
• In all, more than 1.5m, or 28% of businesses, are affected by late payments annually, with businesses owed an estimated £26bn in late payments at any given time, or £17,000 per business affected.

The hidden cost to credit control

Beyond the financial risk, there’s a further hidden cost to credit control. Debt recovery absorbs time, internal resources and morale. For many small firms, the burden often falls on directors or owners themselves. This diverts them from other core business activities.

My first advice to any business is to take firm control of your invoicing and payments. Don’t feel bad about setting and enforcing your payment terms. It is business and you must be professional about it.

Before you get to that point, you should know your customer and their financial status. This includes conducting credit checks if necessary. This will help you make informed decisions about who you are comfortable working with or supplying to. Ultimately, this prior investigation should increase your likelihood of receiving payment down the line.

The debt recovery process

If you see a problem emerging, your first action should be discussing outstanding payments with your customer to agree a solution.

If that does not work, consider employing the services of a solicitor for debt recovery. We understand this itself can be daunting as businesses will often feel faced with a choice of writing off debt or entering an open-ended legal process.

That’s why at Coodes we designed our Fixed Fee Debt Recovery service. With transparent pricing and the backing of Coodes’ locally based specialist legal teams, businesses can recover what they’re owed swiftly and professionally without incurring unpredictable legal costs.

For practical advice for business debt prevention or to learn more about Coodes’ fixed fee Debt Recovery service, contact Kayleigh Whitman. Email kayleigh.whitman@coodes.co.uk or call
01579 324019.