The latest data from the Insolvency Service paints a clear picture of growing business failure in the UK, driven by rising costs and economic uncertainty.
In March 2026, 2,022 companies in England and Wales entered a formal insolvency process, seven per cent higher than the previous month.
In April 2026 the figure rose again to 2,085 and across the rolling 12 months to April 2026, one in 193 active companies entered insolvency.
These figures are a reminder that the financial environment remains difficult and that the right action taken at the right time can make a significant difference.
If you are owed money
Unpaid invoices and late payments tie up cash that your business needs to survive. Cash flow issues are one of the most common causes of insolvency, which is why acting early is critical.
Before a debtor’s position deteriorates further, it is worth considering a formal letter before action setting out the debt and the consequences of non-payment.
Negotiating a structured repayment plan can be more realistic than insisting on a lump sum.
Depending on the circumstances, further options include:
The right step will depend on the size of the debt, the financial position of the debtor and your wider commercial relationship with them.
If your business is under pressure
If your own business is struggling with debt, early action almost always produces better outcomes than waiting.
The number of options available reduces sharply as a company approaches formal insolvency.
Depending on circumstances, these options can include negotiated payment arrangements with key creditors, refinancing, a Company Voluntary Arrangement (CVA) or a moratorium under the Corporate Insolvency and Governance Act 2020.
Directors also need to be mindful of their personal duties as the company’s financial position changes, particularly the duty to act in the interests of creditors as a whole once insolvency is in prospect.
Is the Government doing anything to address late payments?
In May 2026, the Government announced the Small Business Protections Bill, described as one of the toughest late payment regimes in the world.
The Bill is being introduced to Parliament and includes a new 60-day cap on payment terms for large firms, mandatory interest on late payments and a ban on retention practices in construction.
The Small Business Commissioner is also to be given stronger powers to investigate and adjudicate disputes involving persistent late payers, with potential penalties running into tens of millions of pounds for non-compliance.
These measures will take time to implement, however, and many businesses cannot afford to wait for change.
If you need advice on recovering a debt, responding to a winding-up petition or assessing your options as a director, please get in touch.
