To escalate or wait? With late payment, even month two is too late

Nobody enjoys dealing with errant or late payments. I include myself in that, and chasing late payments is my job.

An unenviable role, with contractors in unenviable circumstances

I honestly wish there was no call for it. That's because by the time an unpaid contractor comes to us asking for help, I know only too well the stress and worry they've already endured.

Nobody hires a debt collector lightly. We're a last, desperate resort, writes Safe Collections managing director Adam Home, who has 24 years' professional experience in credit control and debt recovery.

Is late payment less of a problem in 2026?

Unfortunately, there's no sign of me being out of a job any time soon.

Late payments remain an intractable problem in 2026, deeply entrenched in UK business culture, and limited company contractors are an integral part of that culture.

How much in late payments are businesses owed?

Official 'late payment' research from 2025 shows that 1.5 million businesses — more than one in every four in the UK — are affected by late payments annually. At any one time, those businesses are waiting on £26 billion that should be in their bank accounts.

On average, that equates to £17,000 per enterprise.

How many UK businesses shut down due to late payment?

With numbers like that, it's hardly surprising that 14,000 businesses are forced to cease trading every year as a result of not being paid on time.

That's the equivalent of 38 businesses shutting every single day simply because they're not being paid what they're owed.

What is the government doing to tackle late payment in 2026?

You might well wonder, given the size of the problem, what officialdom is doing to tackle late payment. And us too. It's the £26 billion question we've been scratching our heads about for years!

At the time of writing, we're all still waiting on the government's response to its anti-late payment consultation of July 2025, entitled "Late Payments: Tackling poor payment practices."

And also in 2026, the Small Business Commissioner (SBC), the government's 'SMB champion', has trumpeted how many companies it has got to sign up to its Fair Payment Code.

What is the Fair Payment Code?

Unveiled in the fourth quarter of 2024, the Fair Payment Code (FPC) replaced the Prompt Payment Code (PPC) with effect from February 2025. But like its predecessor (the PPC), it's voluntary.

You can read more about the FPC on the website of the SBC's office.

Taking to social media in January 2026, the Small Business Commissioner posted: "Not 1, not 2, not 3 but a merry 14 companies became new Fair Payment Code Awardees this week. Whoop!"

The Small Business Commissioner: successful or not?

But how effective has this 'let's all play nice' approach been, minus any meaningful enforcement?

I think the fact that the SBC's office recently felt it was worth putting out a press release 'celebrating' the fact that it had recovered £1 million in late payments in 2025, bringing the total paid to SMEs to £10 million in eight years since it was established, tells contractors everything that they need to know!

It's hard to put into words what paltry collection figures those are, compared to the £26billion owed to companies at any one time.

Do small businesses have to police late payments themselves?

The sad truth is that, pending a sudden step up by the SBC, small businesses have to look out for themselves when it comes to late payment.

And that's really tough when you are a sole-person business.

How long do small businesses spend chasing late payment?

On average, businesses affected by late payments spend 86 hours of staff time every year chasing them (according to government research). That's an annual holiday for a single person!

As an out-of-pocket one-person business, you don't have any backup.

No one to delegate to. You're left to fight your corner all alone.

What does late payment look like for freelancers in 2026?

So I'm never surprised when late payment ordeals like this one are shared online. To summarise, it's a post by a freelance content creator who was left for six months waiting on the payment of a four-figure invoice for services rendered.

Nobody in employment would put up with waiting half a year for several months' worth of pay. Why should contractors and freelancers?

How long is too long to wait to get paid?

But if there's any moral to be taken from the content creator's story, it's this. The freelancer in question has my every sympathy. But they've been too patient in this instance.

Six months waiting for any sum you are owed is simply too long. And don't get me started on an invoice that's been outstanding for two years!

When to escalate a late payment?

As I said at the top, no one likes resorting to a debt collection agency or specialist like me. But once a late payment stretches into a second or third month, you absolutely should escalate.

And by then, you should have already sent a fair few late payment letters to the customer, and followed our step-by-step advice when you're left out-of-pocket.

Remember, there's no conflict between being professional and putting your own interests first. I want to emphasise this because the freelancer sharing their late payment ordeal clearly felt unsure about speaking out about the extremely late-paying client.

Is it illegal to be paid late in the UK?

Yes, the law is on your side if you're unpaid!

As soon as a payment becomes overdue, you have a legal right to take enforcement action in the form of adding late payment charges and statutory interest.

If you still don't receive payment, you have the right to seek a County Court Judgement (CCJ), a court order to enforce payment.

What can a debt collection agency achieve for the unpaid?

Hiring a debt collector is an intermediary step between enforcing your legal rights and taking the client to court.

The aim of any reputable B2B debt recovery agency will be to resolve payment issues in as swift and amicable a manner as possible, so it never has to reach the court stage. And the court stage can be very long-winded and arduous.

What does a debt collection agency do?

We can't speak for others! But in our case, as a specialist with decades of experience connecting contractors with their hard-earned income, we actively remind debtors of their legal obligations to pay.

We also provide the debtor with evidence of the legal contracts that they have entered into with you.

A lot of the time, it can be as simple as doing these two things!

Should contractors wait if they're not paid on time?

Regardless, there really is no need for freelance contractors to wait and suffer.

Ultimately, it's a straightforward matter of enforcing your legal rights. Once a client breaches payment terms, they are doing financial damage to your business — in breach of the law.

Are debt collection specialists value for money?

It's very often less costly, less time-consuming and less stressful to ask for help from debt collection specialists than it is to play the patience game.

Escalating a late payment in some shape or form is also doing other traders a favour.

Indeed, as the unpaid freelancer subsequently found out, the customer was clearly paying suppliers as slowly as possible as a matter of policy. How else does one explain the nearly 20 other freelance contractors who came forward with similar experiences?!

Why do companies pay contractors late?

Paying late is immoral, unethical and deeply damaging to the wider economy.

But many companies nonetheless flout contractor payment terms not out of incompetence or because they are struggling themselves financially, but as a conscious commercial decision to boost their own finances.

Finally, contribute to the greater good…

By acting swiftly and decisively to get your invoices paid, you're not just helping yourself.

Effective enforcement action through professional channels is the key weapon freelancers and contractors have in the small business battle against late payments. With it legally in place, but by not using it, you risk running a business with one hand tied behind your back.