The Autumn Budget 2026 has brought a mixture of interim relief and rising business costs as well as changes to tax compliance. For credit managers and finance leaders, the most important thing to question is: how might these measures affect our customers’ ability to pay?
UK inflation is forecast to peak at 3.8% in early 2027, while the OBR expects economic growth to slow to 1.0%.
For businesses already managing higher operating costs, borrowing pressures and constrained working capital, this could create further problems. And for credit teams, the challenges could start appearing in customer behaviour.
So, what should credit managers be paying attention to after the Budget?
Map your exposure before July 2027
For businesses that are reliant on transport and distribution – there’s an extension of the temporary 5p fuel duty cut and the HGV road tax holiday until 1st July 2027. The end of this short-term relief is likely to hit harder, leading to higher costs for businesses operating vehicle fleets or relying heavily on road transport.
Logistics, haulage, wholesale and distribution businesses may be particularly exposed. If costs rise and businesses can’t pass increases on to customers, the pressure on profit margins could affect their available cash flow.
For credit teams, there’s concern that the additional costs could lead to longer payment cycles or requests to extend credit terms.
What should credit teams do after the Autumn Budget?
- Identify customers with transport and fuel exposure now – don’t wait for the measures to expire at the start of July.
- Review existing credit limits, payments terms and historical payment behaviour. Now might be the opportunity to speak to customers about how they expect to manage future cost increases.
The point of this is to better understand where payment risk could increase and make plans before problems arise.
Factor HMRC into customer risk
The Budget has also stepped up HMRC’s approach to tax compliance and debt collection. The government has committed to recruiting an additional 670 HMRC compliance officers by 2029-30 and investing more in tax debt recovery.
It has announced plans to introduce powers from July 2029 allowing HMRC to recover lower-value tax debts through regular instalments directly from the bank accounts of taxpayers who can afford to pay but often fail to do so.
For credit managers, this shows how important it is to understand the customer’s wider financial commitments.
Businesses experiencing cash flow difficulties may already be balancing payments to suppliers, lenders, employees and HMRC. Financial strain is indicated where tax debts build up.
Extra pressure to settle tax liabilities could leave some customers with less flexibility when paying commercial creditors.
What should credit teams do after the Autumn Budget?
- Check your customers – what’s their overall financial position, are there signs it’s deteriorating and are you looking beyond just their outstanding invoice balances?
Early warning signs might include:
- more requests for extended payment terms.
- partial payments instead of full settlement.
- frequent broken promises to pay.
- a once reliable customer becoming unreliable.
- requests to restructure existing outstanding balances.
When looked at separately, these behaviours don’t always indicate serious financial difficulty. However, when a few appear together, they likely justify a closer review.
Revisit sector assumptions before tightening credit terms
Not all businesses will experience the Budget in the same way. Some sectors face higher operating costs and others are set to benefit from targeted government support.
From April 2027, around 10,000 energy-intensive manufacturing businesses are expected to benefit from electricity discounts of 20-25%, including a back payment relating to 2026-27.
There’s also support for qualifying retail, hospitality and leisure businesses in England, with business rates set to be frozen in real terms, reduced or cut to zero from April 2027. These measures could provide valuable breathing space and offset other business costs.
While the wider economic outlook may justify closer risk monitoring, credit teams who apply stricter policies could unnecessarily restrict customers whose financial positions are stable or improving.
What should credit teams do after the Autumn Budget?
- Review customer exposure by sector as well as their individual circumstances. A targeted approach can protect your cash flow without damaging valuable customer relationships.
You might have a manufacturing customer eligible for energy relief with a very different financial outlook to a business that continues to pay high electricity costs. On the other hand, you may have a small retailer benefitting from reduced business rates that sees improvement in operating cash flow but isn’t automatically relieved of other financial pressures.
Start e-invoicing readiness now
From 1st April 2029, VAT-registered businesses will generally be required to issue and receive VAT invoices electronically in a specified structured format, subject to any exemptions.
The government published its implementation roadmap alongside the Autumn Budget 2026, so businesses have more clarity of how the change will operate.
While 2029 seems far away, e-invoicing is a lot of work for accounts receivable and credit management. Accurate, structured invoice information can help reduce manual processing and speed up the resolution discrepancies. This matters because incorrect invoice details and missing purchase order references lead to payment delays.
This doesn’t mean to say that introducing electronic invoices will solve these issues overnight – businesses need effective measures in place to ensure all information is correct.
What should credit teams do after the Autumn Budget?
- Review current invoicing procedures and pick out where the delays happen. Then, ask yourself:
- are invoices often disrupted because information is missing or wrong?
- is customer master data up to date?
- do purchase order mismatches cause delays in payments?
- can teams find and resolve invoice disputes swiftly?
- will existing finance systems support the upcoming e-invoicing requirements?
Working with AR, finance and IT teams right now will make the transition simpler. Now is the opportunity to address inefficiencies that could be affecting your collection performance.
Watch for increased pressure on working capital
From April 2027, the National Living Wage will rise by 3.9% to £13.21 an hour, increasing employment costs for businesses with larger workforces on or near minimum wage rates.
Combined with elevated energy prices, borrowing costs and slower economic growth, which could increase the pressure on business’ working capital.
Labour-intensive sectors like hospitality, retail, care and other service industries may be particularly sensitive to these changes.
Businesses experiencing reduced financial flexibility might look for ways to retain cash for longer, such as:
- delaying supplier payments
- requesting extended terms
- making greater use of available trade credit
For suppliers, it can leave cash tied up in accounts receivable for longer than expected.
What should credit teams do after the Autumn Budget?
- Pay attention to changes in DSO, overdue debt and credit utilisation.
- Pay attention to customers who begin using more of their available credit limit while taking longer to settle invoices.
Where customers face genuine short-term cash flow difficulties, contacting them early and organising manageable payment plans can help.
Credit teams should work closely with sales and finance teams to make sure commercial decisions reflect the customer’s current level of risk.
Review investment timing and customer borrowing commitments
From 1st January 2027, the main-rate First Year Allowance increases from 40% to 50% for qualifying expenditure. Meanwhile, the main writing-down allowance reduces to 12% from April 2027.
These changes could influence when businesses choose to invest in qualifying assets. For CFOs and finance teams, this is the opportunity to review the timing of planned investment alongside the associated tax treatment and cash flow implications.
For credit managers, it’s also worth considering how major investments and existing borrowing commitments affect customers’ liquidity. Profitable businesses can still experience short-term cash-flow pressure when undertaking capital expenditure or managing substantial debt repayments.
What should credit teams do after the Autumn Budget?
- Check if existing credit limits are still appropriate – especially with customers who have large borrowing or investment commitments.
Where risk exposure justifies it, updated financial information or cash flow forecasts could provide a more rounded perspective on their ability to meet payment obligations.
Internally, finance leaders should look at timing of planned systems and equipment investment with their tax advisers, especially where it could improve credit control and accounts receivable processes.
More about Baker Ing
The Budget offers some businesses temporary relief but it doesn’t remove the financial challenges many customers will be facing in 2027. For credit managers, the priority is understanding where pressures are most likely to affect payment behaviour.
If you need a second view on your high-value and sensitive accounts receivable, contact our senior credit directors today.