Late payments have been a challenge for businesses for a long time, but the latest EU Payment Observatory report confirms that the issue is only getting worse. Nearly 50% of businesses across Europe report being affected by overdue invoices, with payment delays increasing across multiple industries. For companies relying on steady cash flow, this trend poses a serious financial risk.
At CMOS, we specialise in credit management and outsourced credit control, helping businesses recover outstanding invoices and implement effective credit control practices. In this blog, we break down the latest payment trends, their impact on businesses, and how you can protect your cash flow.
The Current State of Late Payment in 2024
According to the EU Payment Observatory Report, the past year has seen a deterioration in payment performance across the EU:
- Average payment periods have increased, particularly in B2B transactions.
- Larger companies are more likely to pay late, while SMEs tend to pay on time.
- Late payments cause more late payments and create a chain reaction of unpaid charges.
- 55% of businesses accept longer credit terms due to the fear of damaging client relationships.
This trend has direct implications on businesses, particularly in sectors with tight profit margins. If your business is experiencing late payments, you’re not alone, however a proactive strategy is vital to tackle the situation.
The True Cost of Late Payments
Unfortunately, the total of the invoice is not the only financial strain that is put on a business when the bill does not get paid. There are multiple issues it can lead to:
- Cash Flow Disruptions – Late payments make it difficult to cover operational costs, payroll, and supplier payments.
- Reduced Investment Opportunities – Delayed revenue means businesses have less potential to invest in future growth.
- Higher Risk of Insolvency – Continuous late payments can push financially vulnerable businesses into closure.
If the issue of non-payments is left unaddressed, it won’t just affect one business – they ripple through entire supply chain, affecting industries at large.
How Businesses Can Protect Themselves
Even though the above findings don’t seem too promising, the good news is that there are proven strategies that can reduce the risk of late payments and maintain healthy cash flow. There are some key steps a business can take:
- Strengthen Credit Control Process
It is important to have robust credit control measures. It includes:
- Clear payment terms – Ensure your contracts specify due dates, penalties for late payments, and interest charges.
- Automated invoicing and reminders – Various digital tools can help streamline payments and reduce delays.
- Credit checks on new clients – Before extending credit to new clients, make sure to assess their payment history.
- Follow Up on Overdue Invoices Promptly
A lot of businesses delay chasing payments out of concern for client relationships. However, it can be easily prevented with a structured follow-up process:
- Send payment reminders before the due date.
- Follow up as soon as the payment becomes overdue.
- Escalate to collections if necessary.
- Outsource Debt Collection and Credit Control to Professionals
When payments remain outstanding regardless of the follow-ups, professional debt collection service providers can ensure faster recovery while maintaining client relationships.
At CMOS, we specialise in credit management and outsourced collections, allowing businesses to recover debts efficiently and without the stress of chasing overdue invoices.
Why CMOS?
CMOS provides tailored credit management solutions to help businesses improve cash flow and reduce late payment risks.
We understand that chasing payments can be time-consuming and frustrating. Let us handle it while you focus on growing your business.
📞 Get in touch with us today to discuss how we can support your business and help you maintain financial stability.
