The latest Federal Reserve data paints a concerning picture for US businesses: commercial debt delinquencies have risen for the third consecutive quarter, reaching their highest level since 2021. For businesses that extend credit, this is a significant warning sign.
According to data released in February 2026, commercial and industrial loan delinquency rates have climbed to 2.8% — up from 1.9% just 18 months ago. The sectors hit hardest are construction (up 31%), logistics (up 22%), and professional services (up 18%).
What's driving this? A combination of factors: elevated interest rates putting pressure on debtor cash flows, a slowdown in certain regional economies, and — perhaps most significantly — a post-pandemic normalisation of payment terms that had been artificially extended during the emergency period.
"Businesses that have not reviewed their credit risk processes in the last 12 months are significantly more exposed than they realise. The risk landscape has changed materially."
If you extend credit to other businesses — even long-standing clients — the current environment demands a more proactive approach to receivables management. Here's what we recommend:
If you are still offering net-60 or net-90 terms without credit checks, you are taking on unnecessary risk. Consider tightening terms for new clients and higher-risk existing accounts.
The longer an invoice sits unpaid, the harder it becomes to recover. Data consistently shows that invoices chased within 30 days have a recovery rate of over 90%. After 90 days, that drops to under 60%.
Businesses that outsource their accounts receivable function to specialists consistently achieve lower DSO (Days Sales Outstanding) and higher collection rates than those managing in-house.
At Hawthorne Cole Meridian, we have seen a 34% increase in new case submissions in the first quarter of 2026 compared to the same period last year. The increase is spread across sectors, but construction, logistics and professional services are particularly prominent.
The good news is that with early professional intervention, the vast majority of these debts are recoverable. If you have outstanding invoices that are causing concern, now is the time to act — before they become write-offs.
Richard is the Founder and CEO of Hawthorne Cole Meridian with 25 years of experience in commercial debt recovery. He founded HCM in 2001 after leading recovery operations at two major US banks.
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