Worsening payment performance is no longer simply the by‑product of poor processes or administrative error. In many cases, it is a deliberate and rational choice, one of working capital management.

Against a backdrop of higher interest rates, tighter credit and ongoing economic uncertainty, businesses are protecting their own liquidity by paying later. Stretching payables has become an informal, largely unspoken source of funding with pressure routinely pushed down the supply chain.

For treasurers, this represents a structural shift in risk. Payment behaviour can no longer be assumed to follow contractual terms and traditional leverage over counterparties has weakened. What was once occasional slippage is now embedded practice. The implication is clear: treasury can no longer treat late payment as an exception. It must be managed as a permanent feature of the landscape.

The importance of collaboration

At GXO, our experience shows that the response starts with collaboration, but not the superficial kind. Effective collaboration requires deep, ongoing coordination between treasury, credit, collections and the commercial teams negotiating payment terms. Crucially, this work must be human‑led. Data is plentiful, but insight does not appear on its own.

Credit and collections specialists work closely with treasury and the wider business to interpret what payment data is really telling us. Judgement, customer knowledge and context are layered onto the numbers.

That collaboration changes the quality of decision‑making. Extended payment terms are assessed not just on what is written in contracts, but on how customers actually behave. Past payment patterns, recent trends and the pressures customers face in their own markets all inform a more realistic view of risk. Without this alignment, treasury is left absorbing the consequences of commercial decisions it had little opportunity to influence.

The role of GXO’s credit and collections teams is therefore central, not peripheral. These teams actively analyse payment behaviour across regions, sectors and customer cohorts. They identify patterns such as systematic quarter‑end delays, performance deterioration following renegotiations or habitual late payment masked by occasional large settlements. Just as importantly, this analysis is reinforced through direct customer engagement, dispute resolution and escalation discussions.

That human interpretation allows GXO to distinguish between operational delay and deliberate deferral – a distinction that has a direct impact on liquidity planning.

What does treasury need?

Clear role definition underpins this approach. Treasury does not chase cash. That responsibility sits firmly with credit and collections. Treasury’s role is to manage the outcome of collections, cashflow, liquidity and risk exposure.

Visibility is the next requirement, and it must be forward‑looking. Knowing that customers are paying late is not enough – treasurers need to understand why. Cash forecasting increasingly needs to reflect how customers actually pay, not how contracts say they should.

There is also scope to move from purely human‑led analysis to predictive tools. AI‑driven analytics have a role to play here, particularly in identifying emerging payment risk before invoices fall overdue. Used properly, these tools sharpen focus and prioritisation. They do not replace judgement. Their value lies in supporting earlier action with insight shared in real time and acted on quickly.

Regulatory initiatives, including mandatory payment reporting in the UK as an example, may curb the most extreme behaviour over time. But late payment remains, at its core, a commercial issue. Where bargaining power sits with large buyers, regulation alone will not materially change behaviour, particularly in stressed conditions. Treasurers must plan accordingly.