Late payments and cash flow: what legal options do businesses have in 2026

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Late payments can be fatal to a business. They can harm cashflow, leaving a business unable to operate as normal or pay its own debts and, in the worst-case scenario, can trigger insolvency. It is, therefore, essential that businesses have good options for chasing debts and unlocking cashflow when needed.

If you are experiencing cashflow issues in your business due to late payments, then you are not alone. Around 4 in 5 (82%) of SMEs struggle with cashflow and more than 1 in 3 (36%) of businesses receive payments late, according to government research. However, only around 1 in 4 (27%) take formal action to chase late payments with around 2 in 3 (68%) doing so informally.

In this article, we cover some tips on how to avoid late payments, your options for chasing debtors in 2026 and how working with the right professionals can help.

Need expert support with late payments and cashflow? Please contact John Wiblin who will be happy to advise. Longmores offers a fixed fee debt recovery scheme as well as a bespoke option at our standard hourly rates to suit your requirements.

Tips for avoiding late payments

  • Be clear about pricing at the outset – Almost 1 in 3 (31%) of late payments are due to disputed invoices, according to late payers themselves. Making sure all prices are clearly set out in writing at the start can minimise the potential for such disputes.
  • Set clear payment terms – This can reduce late payments and give solid grounds for chasing invoices. For example, if you require payment within 30 days of the invoice date, a late payer has little room to complain if you chase after this time limit.
  • Establish effective credit control practices – This helps to ensure invoices are sent promptly, the amount owed and due date are clear, and they can be chased as soon as they become overdue. It will also help you to know when it is time to escalate matters.
  • Identify regular late payers – Nearly 1 in 5 (18%) of late payments are thought to be caused by customers delaying payment deliberately as a form of ‘free finance’. Keeping track of payment times can help to identify this type of behaviour so you can decide if you want to keep doing business with these customers.

Your options for chasing late payments in 2026

  • Chase invoices promptly for easy wins – Chasing invoices yourself can be highly effective – more than 1 in 3 (36%) of late payers blame administrative errors, while around 1 in 4 (24%) of creditors believe this is the reason. These issues can often be quickly resolved with good communication, unlocking payments and cashflow.
  • Use professional debt recovery experts when needed – Often, being contacted about a debt by a professional is enough to secure quick payment as it shows you are serious.
  • Be prepared to take robust action when needed – Options include bringing a claim through the County Courts, obtaining judgements against debtors and (in extreme cases) starting insolvency proceedings.

How a professional business debt recovery service can help you

  • Drafting payment terms and creating credit control practices – This can help you to avoid late payments and enable you to chase them effectively yourself.
  • Providing expert early advice on late payments – Including your options and the costs involved, so you can be sure any action you take is proportionate to the debt owed.
  • Drafting and sending Letters Before Action – These set out the sum owed, the reason for the debt, the date by which payment must be made and what further action will be taken if the debt is not paid.
  • Pursing County Court Money Claims – Including preparing your case and representing you where the debt is disputed and evidence must be presented to support your claim.
  • Securing Count Court Judgements (CCJs) – Where a debt is not disputed but has still not been paid, the threat of a CCJ can be enough to prompt payment.
  • Taking enforcement actions – If a debt is still not paid, then various enforcement actions can be taken to recover the debt, including having agents attend the debtor’s premises to take control of goods equal to the debt and placing a Charging Order on their property to secure payment when the property is sold.
  • Initiating insolvency proceedings – Should the debt still not be recovered, it may be necessary to initiate insolvency proceedings. This can allow you to be formally named as a creditor and give the option for the debt or a portion of it to be recovered from the sale of the business’s assets.

How Longmores can help with late payments and cashflow issues

Longmores’ Business Dispute Resolution team works with a wide range of businesses to resolve late payments and unlock vital cashflow. We offer a fixed fee debt recovery scheme as well as a bespoke option at our standard hourly rates to suit your requirements.

Our business debt recovery experts take a pragmatic approach, so will always advise on the best options for your situation, the likely outcomes and the costs involved. You can then ensure you are dealing with your outstanding payments in the right way for your overall business interests.

For expert support with late payments and cashflow issues, please contact John Wiblin who will be happy to advise

Please note, the contents of this article are given for information only and must not be relied upon. Legal advice should always be sought in relation to specific circumstances.