December Is the Most Dangerous Month for Late Payments

Every December, we see the same pattern repeating itself across the UK. Invoices go unpaid. Phones stop ringing, emails get ignored, and debtors “go quiet”. This means that business finance teams have to brace themselves for what can become a very tough start to following year in January.

For many businesses, Christmas is not just a festive distraction — it’s the single worst month of the year for cashflow challenges. Partial shutdowns over the holiday season restrict revenue generation, and debtors become harder to get cash out of.

And yet, year after year, thousands of companies allow December to happen without reviewing and tightening their credit control procedures, without preparing for inevitable debtor excuses, and without putting a collections strategy in place.

For some, the consequences are minor. For others, it can be catastrophic: lost clients, challenges with paying the month’s payroll bill, needing to refinance early in the new year to put the business on a more secure footing, or in the most extreme of cases… potential insolvency.

Why Christmas Creates the ‘Perfect Storm’ for Late Payments

Everyone knows that December is a busy month for all — but what people responsible for cash collections within your business and every other business often underestimate is how many challenges will all converge at once in the month:

1. Businesses slow down or shut down entirely

Many companies close from mid-December until the first week of January. That means:

• No accounts team available to process invoices and make payments
• No approvals being made of invoices that require paying
• No sign-off for payments from management
• Limited staff if any answering phones or emails

If your invoice hits an accounts team desk on the 14th of December, there is a genuine risk that it may not be looked at until January 5th.

2. Cashflow is “secured” internally at your debtors

You’re not the only creditor they will owe money too. In December, many businesses deliberately hold on to cash in the bank. Protecting in the process their own internal cashflow over the Christmas and New Year shutdown.

The standard tricks deployed for this will often include:

• Selective payment practices that will also include;
• Prioritising “must-pay” suppliers where they know there is a genuine risk of them restricting supply of goods or services
• Delaying everyone else where they don’t see such a risk occurring

If you’re not considered essential, or seen as not being on the ball with your credit control, you are very likely move down the queue for payment.

3. Staff take holidays — creating internal bottlenecks

Most companies have:

• Finance managers on annual leave. Especially if they have to use holiday allowances by the end of the calendar year
• Directors away, so limited people around with authority to approve payments, especially larger ones.
• Finance Directors finishing off and approving budgets for the year ahead
• Ops teams finishing the year’s workload so they can break up with a ‘clean desk’

There is a very real chance from all of this that your invoice can be “agreed” but still unpaid because the sole authorised signatory is somewhere on a beach.

4. Debtors intentionally delay hoping you’ll avoid chasing

Sadly, we see this every year. Some debtors intentionally use Christmas as cover, knowing:

• You’re busy and there is less chance of you chasing
• You’re winding down and trying to make sure the ‘main’ tasks get completed
• You’re unlikely to escalate as you will understand the challenges of the time of year
• You don’t want confrontation over the holidays

So they take advantage, as discussed above. Either trying to protect their own cash flow as they know others will pay them late, or minimising interest on finance agreements as they know they can get away with it for the month.

5. The brutal truth: Businesses collapse in January

This is the part most business owners never consider.

Some companies hit serious financial difficulty during Q4. By January, bank covenants, HMRC arrears, staffing costs, and overhead renewals all hit at once. Many companies have corporation tax and VAT bills due at the end of January. They then struggle with paying these ars they are behind with cash collections following a poor December

If your debtor goes bust in the new year, your window to collect is gone.

This is why December collections aren’t just important — they are arguably business critical.

How to Strengthen Your December Cash Management Strategy

Send final reminders early not in mid-December

By the 12th December, most businesses are already winding down.

Start chasing:

• Week commencing 2nd December
• Then follow up within 72 hours
• Then escalate no later than 9th–13th December

Tighten your credit control language

Avoid soft wording. Replace:

• “Can you give us an update?” with
• “This requires immediate settlement before year-end close.”

Encourage part-payments

A debtor who pays something is more likely to pay the rest.

Move slow or non-responsive payers to formal debt recovery

If they’ve ignored:

• Reminders
• Phone calls
• Final notices

…it’s time to escalate before they shut down.

Assess risk of debtor insolvency

Watch carefully the language each business is using. You can also learn a lot from what they don’t say, as well as what they do and how they say it. Common indicators include:

• “We’re restructuring”
• “Our accountant is working on year-end numbers”
• Frequent staff turnover
• Directors non-responsive
• Company credit scores dropping

If those signs are there, then you would be wise to take the view that December escalation is essential.

Your December Credit Control Checklist

Here’s a simple 10-point checklist you can use immediately:

• Review every overdue invoice that is more than 7 days past due
• Identify high-risk debtors early, payment patterns throughout the year are a good start
• Flag any companies with weak financials, add them to the high risk list in December / January
• Issue final payment reminders now
• Follow up via phone within 24/48 hours. It’s harder to dodge the question on the phone
• Consider offering part-payment options
• Put non-responsive debtors on 48-hour escalation, give them nowhere to hide
• Prioritise debts owed by companies that may be at risk of year-end insolvency
• Hand slow payers to a professional debt recovery partner, this will always focus their minds
• Secure as much cash as possible before you break for Christmas and New Year