Solve Cash Flow Problems Caused by Delayed Customer Payments

Delayed customer payments are a leading cause of cash flow problems for UK businesses, reaching a record level in 2025, leaving business owners out of pocket and slowing operations.

According to the Federation of Small Businesses, cash flow issues caused by late payments could force more than 440,000 small firms to close. The good news is that you don't have to accept this as the cost of doing business. With the right strategies and tools, you can take control of your cash flow and solve delayed payments for good.

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Why delayed customer payments are a growing problem for UK businesses

The issue of late payments is a long-standing frustration for UK businesses, and recent economic pressures have only made it worse. 

 A 2025 survey found that three in four (77%) businesses are owed money by late-paying customers, averaging £18k-£22K for SMEs with 10 or more employees. The UK government puts the damage to the UK economy at £11 billion per year, affecting over 1.5 million businesses, with late payments contributing to the closure of 38 businesses per day. 

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The hidden cost of late payments on your cash flow and operations

The impact of delayed payments goes well beyond simply being out of pocket for a few days. Uncertain cash flow and inconsistent resources can affect every part of your business.

• Operational issues: When you don't get paid, it becomes difficult to pay your own suppliers, which can lead to strained relationships and damage your business's reputation.
• Slower growth: A lack of available cash at the right time means you can't invest in new projects, buy necessary materials, or hire the staff you need to grow.
• Increased debt and costs: To cover the shortfall, many businesses are forced to rely on credit cards, overdrafts or loans, taking on debt with high interest rates just to stay afloat.
• Wasted time and resources: Chasing invoices is a time-consuming and often stressful task. Every hour spent on the phone to a customer's accounts department is an hour not spent on your business.

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What causes B2B customers to delay invoice payments

Payment terms for extending payments are a common part of B2B transactions – but these arrangements are distinct from simply paying late. The reasons B2B customers delay invoice payments can range from simple oversights to systemic issues with payment systems.

• Customer cash flow problems: Often, your customer is also waiting to be paid by their own clients, creating a domino effect of late payments down the supply chain.
• Inefficient processes: In larger organisations, your invoice may have to pass through several departments, from procurement to approvals and finally to accounts payable, before it can be paid, creating delays and opportunities for human error.
• Invoice errors: Simple mistakes like a missing purchase order number, incorrect payment terms on the invoice, or a lack of clarity on the services provided can cause an invoice to be rejected, delaying payment.
• Lack of follow-up: Many businesses simply send an invoice and wait for the money to arrive, meaning the customer simply forgets to settle it.
• Deliberate strategy: Unfortunately, some large companies with more leverage intentionally delay payments to smaller suppliers as a way to manage their own working capital, effectively using them as an interest-free credit line.

When it comes to addressing late payments in your business, finding trade credit solutions that target these issues can safeguard your cash flow while still providing your customers with the flexibility they need.

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How BNPL and trade credit can eliminate the risk of late payments

Despite how widespread they have become, you don’t have to accept delayed payments as a fact of life. Modern trade credit solutions and embedded payments tools can streamline your cash flow, ensuring you get paid straight away while customers can access terms that suit their needs.

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How can trade credit solutions prevent late customer payments?

Modern trade credit solutions like B2B Buy-Now-Pay-Later (B2B BNPL) completely change the dynamic. Instead of you extending credit and hoping to get paid, a provider like iwocaPay pays you instantly for the invoice. This transfers the credit risk and the responsibility for collection away from you, guaranteeing you get paid on time, every time.

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Is BNPL suitable for B2B businesses?

Yes - while many people associate BNPL with consumer shopping, B2B BNPL products like iwocaPay are specifically designed for transactions between businesses, offering standard terms like Net 30 and spending limits up to £30,000 to suit the needs of B2B customers.

iwocaPay will pay you the full invoice amount upfront, then allow your customer to pay in instalments over an agreed period, such as 3 or 12 months. 

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BNPL vs traditional credit control: what’s right for your business?

Choosing between managing credit yourself or using a BNPL solution comes down to how you want to spend your time and where you want to focus your risk.

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What's the difference between offering trade credit and chasing invoices?

Offering trade credit is a proactive sales strategy to give customers the flexibility to buy from you. Chasing invoices is the reactive, time-consuming administrative task of trying to collect that money after the fact. Modern BNPL solutions let you do the first without ever having to worry about the second.

Traditional credit control involves a lot of manual work: running credit checks on new customers, setting payment terms, sending reminders, making awkward phone calls, and in the worst cases, taking legal action. A BNPL solution outsources this entire function. You get paid instantly, so there are no trade receivables to manage on your books, and the provider handles all payment collections.

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Preventing late payments with clear terms and customer-friendly options

If you choose to manage your own credit, being transparent and proactive is key to minimising late payments.

• Set clear terms from the start: Ensure your customer understands your payment due dates and any potential penalties for late payment before you even start the work. These details should be clearly stated on the payment terms on the invoice.
• Invoice promptly and accurately: Don't wait until the end of the month. Send invoices as soon as work is completed to start the payment clock ticking. Use automated invoicing software to ensure speed and accuracy, and always double-check that details like purchase order numbers are correct.
• Make it easy to pay: The simpler you make the payment process, the more likely you are to get paid on time. Offer various methods and include a payment link directly in your email or invoice so customers can pay with a single click.
• Offer incentives and penalties: Consider offering a small prompt payment discount as a positive incentive. You also have a statutory right to charge interest on overdue commercial debts.

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Choosing the right trade credit provider for your B2B business

If you decide a BNPL or trade credit solution is right for you, it's important to choose the right partner. Look for a provider that offers:

• Simplicity and easy integration: The solution should be easy to implement and work with your existing invoicing or e-commerce platforms.
• Intuitive customer experience: The process should be smooth and professional for your customers, enhancing your relationship rather than complicating it.
• Flexibility and control: Look for a provider that lets you decide which invoices or customers to offer terms on and gives you control over the fee structure.

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Advanced tools to forecast and prevent cash flow gaps

Beyond chasing payments, strong financial management is your best defence against cash flow problems.

• Cash flow forecasting: Regularly create a cash flow forecast to anticipate future tight spots. This gives you time to arrange financing or cut costs before a crisis hits.
• Real-time accounting: Use modern accounting software to get an accurate, up-to-date view of your finances. This makes payment reconciliation simpler and gives you the data you need to make informed decisions.
• Credit checking: Before offering terms to a new customer, use a company credit check service to assess their payment history and financial stability.

The best payment strategy involves understanding your specific business needs, whether you're serving customers in-person, online, or in a B2B context, and choosing a mix of solutions that are secure, efficient, and customer-friendly. 

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Reduce late payments with iwocaPay

If you're a B2B business looking to offer flexibility without taking on risk, iwocaPay provides a complete solution that puts you in control.

• Get paid instantly: We pay you upfront for invoices, so your cash flow is always secure.
• Offer flexible terms without the risk: Give your customers the option to pay later over 3 or 12 months, while we handle the credit checks and collections.
• Eliminate card fees: Offer a free and secure instant bank transfer option with iwocaPay Pay Now, so you can stop paying to get paid.
• Increase sales and customer loyalty: Make it easier for customers to buy from you by offering the payment flexibility they need.

Book a demo today to find out more.

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