Payment defaults dip by 1%

Payment defaults dip 1% on average across UK across all industry sectors from May 2024 to May 2025 according to latest research by Atradius. Despite continued inflationary pressure, high operating costs, and global economic uncertainty, some sectors are showing strong signs of resilience.

The most notable year-on-year declines in payment claims (May 2024–May 2025) were seen in the Agriculture (-57%), Electronics (-50%), and Transport (-30%) sectors – highlighting emerging stability in traditionally volatile industries.

Payment defaults in the agriculture sector fell by 57% with improving purchasing power, coupled with stabilising interest rates helping to strengthen the sector. However, the sector continues to face pressure, with managing working capital remaining a particular challenge, alongside slow-moving inventory and difficulty in freeing up cash from receivables. Atradius’ Payment Practices Barometer – an annual global survey of B2B payment behaviour – found 43% of UK agri-food companies expect the insolvency risk to increase amid economic uncertainty and geopolitical developments affecting trade and supply chains.

Driving innovation and growth in adjacent industries, the electronics sector recorded a 50% drop in year-on-year defaults and a 46% fall in claims month-on-month from April to May 2025. Despite this positive trend, data from the Manufacturing Health Index by Unleashed reveals that electronic manufacturers are still under strain, with a 23% decline in sales and profit margins. Continued investment in R&D and cross-sector collaboration will be key to maintaining momentum.

Nearly half of B2B transactions in the transport industry are now conducted on credit, according to a new Atradius survey. This strategic move has helped keep payment cycles stable, with the sector seeing a 30% drop in year-on-year defaults and a 25% decline month-on-month. While infrastructure and tech-related risks persist, the transport sector appears well-positioned to navigate ongoing economic headwinds.

However, businesses must be wary of growing competitive pressures within the sector and ensure their technology is equipped to overcome challenges around cybersecurity threats.

Atradius’ Payment Practices Barometer highlights that 51% of UK B2B invoices remain overdue. The primary causes include customer liquidity issues (34%), process inefficiencies (28%), and invoice disputes (27%).

As a response, UK businesses have scaled back the level of credit extended to customers, now representing 49% of B2B sales. This strategic reduction has allowed 60% of companies to lower Days Sales Outstanding (DSO), easing cash flow pressures and enhancing financial resilience.

James Burgess, Head of Commercial UK at Atradius, said “It’s reassuring to see a decline in payment defaults, particularly in sectors that have faced significant challenges over the past year. These early indicators of recovery are encouraging, but caution remains key.

“Consumers are still dealing with high prices, and we’ve yet to see a meaningful drop in interest rates. Businesses must stay vigilant against insolvency risks, especially in the second half of the year. Trade credit insurance remains a vital tool, enabling businesses to protect their cash flow, trade confidently, and seize new growth opportunities.”