Your Terms Say 45 Days. 43% of What You Invoice Is Already Late.

Late payment is not an accident that happens to disorganised companies. In the US it is now the ordinary condition of nearly half of everything sold on credit — and most of the reasons have nothing to do with your invoice.

The terms are a suggestion and the calendar knows it

Every business owner I have met can tell you their payment terms. Very few can tell you their collection reality, which is the only one of the two numbers that pays rent. Atradius interviewed 240 US companies in the second half of 2025 about how their B2B customers actually pay, and the result is worth pinning above the desk of whoever chases your receivables.

By value, 52% of B2B invoices were paid on time. 43% went overdue. 5% were written off as bad debt. Not 43% of customers — 43% of the money. When you set terms at 45 days and build a cash forecast on them, you are forecasting the smaller half of your revenue accurately and the larger remainder on hope.

Before you take that personally: this is not a survey of badly run companies. Nearly half of all B2B sales in the sample are made on credit at all, which means extending terms is simply the price of being in the market. The 43% is not evidence that you picked bad customers. It is the operating environment.

Why they pay late, in their own words

This is the part that changes what you do on Monday. Asked for the top reasons their B2B customers pay late, suppliers gave four answers, and only one of them is about the customer’s willingness to pay.

Look at the second bar. A third of late payment is administrative — the money exists, the approval is sitting in somebody’s queue, and nobody at either company has noticed. That is the cheapest receivable problem you will ever have, and it is solved by knowing which human approves your invoice and confirming the invoice reached them, not by a sterner reminder on day 46.

The fourth bar, invoice disputes at 23%, is the one founders consistently underestimate. Nearly a quarter of late payment traces to a disagreement about what was delivered or what was billed — meaning it was created at the point of sale or the point of invoicing, weeks before anyone in accounts thought about it. If your quotes are vague, your receivables will be late, and no amount of collection discipline fixes that after the fact.

Two of the four leading reasons your invoices are late were created inside your own company, before you sent them.

Nobody is having the same year

There is no single national trend to plan against, which is itself the finding. Asked how their days sales outstanding had moved over the previous twelve months, US suppliers split three ways: 37% collecting faster, 28% collecting slower, 35% unchanged. The same applies across industries. Overdue invoices ran at 40% in agri-food, 44% in energy and fuel and 44% in electronics and ICT, with bad debt from 3% to 6% depending on the sector.

Electronics and ICT is the instructive one. That sector runs the loosest credit in the survey — 54% of sales on credit, terms averaging 50 days rather than 45 — and it also carries the highest bad debt at 6%. Generous terms buy revenue and they buy risk, in roughly the proportion you would expect. That is a decision to make deliberately rather than by drifting into whatever the last customer asked for.

Read those four together and the mechanism is obvious. Companies are extending more credit, getting paid late on nearly half of it, and covering the hole with bank debt. Nearly half of the same businesses are also delaying payments to their own suppliers to hold liquidity — which is how one customer’s slow approval queue becomes three other companies’ cash flow problem. The lateness is a chain, and everyone in it believes they are the reasonable link.

What to do with this

First, rebuild the cash forecast on collection behaviour instead of contract terms. If 43% of invoiced value lands late, a forecast built on 45 days is not conservative or aggressive — it is simply describing a different company than the one you own. Model the money arriving when it has historically arrived. The number will be uncomfortable, and it will be right, and it is the difference between borrowing on purpose and borrowing in a panic.

Second, attack the administrative third before the financial half. Confirm every invoice reached a named approver, match your invoice format to your customer’s system, and put the purchase order number where their software expects it. That is unglamorous work that pulls a third of your late payments forward and costs you nothing but attention. Chase the liquidity-driven lateness after, with terms and credit limits, because that one is genuinely about risk.

Third, price the credit you are extending. If nearly half your sales go out on terms and you are covering the gap with a bank loan at whatever rate you can get, that spread is a real cost of sale and it belongs in your margin calculation. Most owners discover they are running a small, unprofitable lending business alongside the real one. You can decide to keep doing it — plenty of good reasons to — but decide it, and charge for it. One caveat on all of this: these 240 companies skew toward mid-size manufacturers, wholesalers and distributors, so if you are a two-person service firm, treat the direction as reliable and the exact percentages as a benchmark rather than a mirror.

Published by The Lonely Entrepreneur — the community and coaching platform for entrepreneurs who are building alone. lonelyentrepreneur.com

This article is for educational purposes and is not a substitute for professional financial or legal advice.