The Fed Just Raised the Price of Your Slowest-Paying Customers

Every unpaid invoice is a loan. The supplier has delivered the goods, booked the revenue and, in most cases, paid its own staff and vendors, while the customer holds the cash at no cost. For most of the past two years that loan was cheap enough to ignore. On September 16 it got more expensive, and it did so at a moment when customers are paying later, not sooner. The finance teams that treat collections as a clerical function are now subsidizing their customers' balance sheets at a rising interest rate.

The Hike Landed on Receivables That Were Already Stretched

The Federal Open Market Committee raised the federal funds target range by a quarter point to 3.75% to 4%. As this publication noted when the decision came down, the Fed's own projections now point to further tightening rather than relief. For any company that funds its working capital on a floating-rate revolver, the arithmetic is direct: each quarter point adds $25,000 a year to the cost of carrying every $10 million of receivables on the facility.

The same week, trade credit insurer Atradius published its 2026 B2B payment practices report for North America. It found that late payments affect about seven in ten firms across the region and an average 23% of B2B receivables, with days sales outstanding running at around two months from invoicing. U.S. suppliers sell about 45% of their B2B volume on credit terms, and in Canada the figure is close to half. That is a large share of revenue exposed to whatever the customer decides to do with its own cash.

The most important line in the report is about cause. Atradius attributes late payment mostly to customer liquidity constraints rather than disputes or administrative errors. In other words, customers are not paying late because the invoice was wrong. They are paying late because holding the supplier's money is the cheapest financing they have, and a rate hike makes that option more attractive, not less.

Your Customers Are Feeling the Same Squeeze, and Passing It On

The pressure on customer liquidity is visible in the Fed's own survey work. Coverage of the latest CFO Survey from the Richmond Fed, Atlanta Fed and Duke University's Fuqua School, fielded from August 17 to September 4 across around 500 firms, found that about one in five small firms said financing constraints were limiting expansion or making it hard to cover costs. Among firms not planning to invest, 42% cited unfavorable financing or a need to preserve cash, up from 32% six months earlier.

"Where there are challenges they are most pronounced for small and financially constrained firms." – Sonya Waddell, Economist, Federal Reserve Bank of Richmond

Those constrained firms are someone's customers. When Ramp launched an accounts receivable product on September 22, its announcement cited data showing that 43% of U.S. B2B invoice value was overdue last year, that 56% of small businesses report difficulty paying operating expenses, and that 51% struggle with uneven cash flow. A supplier whose customer base skews toward smaller buyers is effectively extending unsecured credit to the part of the economy the Fed says is most stretched.

Finance leaders know this is a problem. CFO Dive's report on the launch pointed to FTI Consulting's 2026 Global CFO Survey, in which 89% of finance leaders said they were stepping up efforts to improve working capital and 90% said they were deploying intelligent document processing to speed invoicing and payment processing. PYMNTS Intelligence research found that 77.9% of CFOs consider improving the cash flow cycle very or extremely important to their strategy. Intent is not the gap. Execution is.

Where the Cash Actually Gets Stuck

The operational data shows how much of the delay is self-inflicted. The 2026 Accounts Receivable Report from Chaser, based on 163 validated responses from finance and accounting professionals, found that 92% of businesses are typically paid after the due date and 17% are paid more than 30 days late. Businesses that follow up on 100% of overdue invoices are 76% more likely to be paid within one week. Yet 31% of businesses that do not follow up on everything leave between 10% and 50% of their overdue book unchased.

The cost of that gap lands on the income statement as well as the balance sheet. In the same survey, 38% of businesses wrote off between 3% and more than 14% of annual revenue as bad debt, and 40% spent six or more hours a week on receivables tasks. Businesses using AR automation software were 52% more likely to be paid within two weeks, but only 43% of respondents had tried such software at all.

Put those findings next to the Atradius diagnosis and a clear picture emerges. When customers are rationing cash, they pay the suppliers who ask first, ask consistently and make paying easy. The invoice that is never chased is the one that gets pushed to next month. As PYMNTS observed after the hike, a company that can collect receivables several days earlier has less need to fund the gap elsewhere, which at current rates is the cheapest source of liquidity most finance teams control.

The Collections Playbook for a Higher-Rate Quarter

• Put a price on DSO: Multiply your receivables balance by your marginal borrowing rate and report the result to leadership every month. A number with a dollar sign on it gets attention that a days metric does not.
• Chase every overdue invoice, not just the big ones: Chaser's data shows complete follow-up is the single largest driver of payment within a week. Automate reminders for the long tail so collectors can spend their time on the accounts that need a conversation.
• Segment customers by liquidity risk: With late payment driven mainly by customer cash constraints, the accounts most likely to slip are the smaller and more leveraged ones. Review credit limits and terms for that segment before year-end, not after the first missed payment.
• Re-run the early-payment discount math: A discount that looked expensive at lower rates may now be cheaper than drawing on the revolver. Compare the annualized cost of the discount against your current borrowing rate and adjust offers.
• Forecast on collection behavior, not due dates: When 92% of invoices are paid late, a cash forecast built on contractual terms is wrong by design. Feed actual payment patterns by customer into the forecast that treasury and FP&A share.
• Fix the data before buying the AI: New AR automation tools match payments, draft follow-ups and sync to the ledger, but only as well as the invoice and customer data in the ERP underneath them. Audit that data first so the tool accelerates collections rather than errors.