8 Proven Tips to Improve Your Credit Control Process
Effective credit control starts before you issue an invoice. These eight practical steps can help UK businesses reduce debtor days, improve cash flow, and spend less time chasing payments — whether you manage the process in-house or are considering outsourcing it.
1. Set Clear Payment Terms from the Start
Payment terms should be agreed and documented before any work begins or any goods are supplied. This seems obvious, but a significant proportion of late payment disputes arise from terms that were never clearly communicated — or that were sent as a line in small print that the customer did not read.
Your payment terms should specify the number of days from invoice date or delivery date, the precise payment method you accept, and your rights under the Late Payment of Commercial Debts Act if payment is not received by the due date. Including a reference to statutory interest is not aggressive — it is factual, and it signals that you manage your credit function professionally.
For new customers, a written credit application or signed order acknowledgement that incorporates your terms and conditions provides the clearest evidence of agreement if a dispute arises later.
2. Issue Invoices Promptly and Accurately
The payment clock starts when the invoice is issued, not when the work is done. Every day you delay raising an invoice is a day added to your payment cycle — so the discipline of invoicing immediately upon completion of work or delivery of goods is one of the simplest improvements most businesses can make to their cash flow.
Accuracy is equally important. Invoices that contain errors — incorrect purchase order numbers, wrong addresses, missing references, or inaccurate amounts — give customers a legitimate reason to delay payment while the error is corrected. More frustratingly, the delay is often compounded by the fact that the incorrect invoice has to go through the customer's approval process again from the beginning.
Before issuing any invoice, confirm that you have all the information the customer needs to process it: their purchase order number, the correct billing address, the name of the person who placed the order, and any project or cost code references their finance team requires. A brief call or email to confirm these details before the first invoice saves significant frustration later.
3. Send a Reminder Before the Due Date
A pre-due-date statement or reminder — sent five to seven days before payment is expected — is one of the most underused tools in credit control. It serves two purposes: it confirms that the invoice has arrived and is in the customer's payment queue, and it provides an early opportunity to surface any queries that might otherwise delay payment.
Most customers will respond to a pre-due reminder with confirmation that payment is scheduled. Occasionally, a reminder will reveal that the invoice has not been received, was sent to the wrong contact, or is being queried — in each case, it is far better to know before the due date than after it. A brief, friendly email or statement is all that is needed.
4. Follow Up Systematically After the Due Date
Once an invoice is overdue, a structured follow-up sequence is the most effective way to secure payment. The sequence should be defined in advance — not decided ad hoc each time — and should escalate in formality as the debt ages.
A reasonable starting point for most UK SMEs is: a friendly email on the first working day after the due date; a follow-up call or email at seven days overdue; a more formal written reminder at fourteen to twenty-one days; and a letter before action referencing your Late Payment Act rights at thirty days overdue. The exact timing and channel can be adapted to your customer relationships, but the principle of a defined, consistent sequence is what matters.
When making contact by phone, the goal is not confrontation — it is a payment commitment with a specific date. Note the date given and follow up if it is not honoured. Keeping accurate records of every contact attempt is important both for managing the relationship and for any future legal escalation.
5. Know Your Customers and Review Credit Limits Regularly
Before extending credit to a new customer, a basic creditworthiness check is good practice. This does not need to be complex — a Companies House search to confirm the business exists and is trading normally, a credit reference check via a service such as Creditsafe or Experian, and trade references from two existing suppliers will provide a reasonable picture of payment risk.
For existing customers, credit limits and payment terms should be reviewed periodically — at least annually, and more frequently for customers whose payment behaviour changes. A customer who was reliable for two years but has started paying later in recent months may be experiencing financial difficulties that warrant a conversation before the balance on your ledger becomes a problem.
6. Keep Accurate Records of All Communications
Every contact with a debtor — whether by email, phone, letter, or in person — should be recorded on the debtor ledger with a date, summary, and any commitment made by the customer. This record serves multiple purposes: it prevents the same ground being covered in every follow-up call, it provides evidence if the debt escalates to a legal dispute, and it helps anyone else picking up the account to understand the history.
Good record-keeping also makes it easier to identify patterns in debtor behaviour — customers who always query invoices at the point of chasing, customers who commit to payment dates they consistently miss, and customers whose payment times are gradually lengthening. These patterns are important signals that deserve a response.
7. Understand and Exercise Your Rights Under UK Law
Many UK businesses are unaware that they have a statutory right to charge interest on overdue B2B invoices under the Late Payment of Commercial Debts (Interest) Act 1998. The rate is eight per cent above the Bank of England base rate, applied from the date payment was due. Fixed compensation of between £40 and £100 per invoice can also be claimed, depending on invoice value.
You do not need a solicitor to assert these rights in the first instance — including a statement of statutory interest on a revised invoice or in formal correspondence is entirely permissible and often focuses a debtor's attention. If the debtor declines to pay, enforcement requires a county court claim — a process that is accessible to businesses of all sizes through the Money Claim Online (MCOL) service.
8. Consider Whether Outsourcing Credit Control Makes Sense for Your Business
Even the best-designed credit control process requires consistent execution — and consistent execution requires time, focus, and discipline that many SME owners and finance teams simply cannot maintain alongside their other responsibilities. This is not a failure of intent; it is a structural reality of running a small business where everyone is stretched across multiple roles.
Outsourcing credit control to a professional service removes this constraint. A dedicated credit controller, working on your behalf, manages the entire follow-up process — systematically, professionally, and without the emotional complexity that can make in-house chasing so difficult. For many UK SMEs, the cost of a fixed monthly retainer is less than the value of the management time it frees up, quite apart from the improvement in cash flow that professional credit control typically delivers.
If you are spending more than a few hours each week on invoice chasing — or if your debtor book consistently includes overdue balances that you cannot find the time to address — it is worth exploring what an outsourced service could offer.
Frequently Asked Questions
Q: What is the most effective way to chase a late invoice?
A: A combination of email and telephone, escalating in formality as the debt ages. Email provides a written record and is appropriate for the initial reminder; telephone follow-up is more effective once an invoice is beyond seven to fourteen days overdue, because it creates a personal interaction that is harder to ignore. The most important factor is consistency — following up at defined intervals rather than sporadically.
Q: How often should I review my credit control process?
A: A brief monthly review — checking whether the defined process is being followed and whether debtor days are moving in the right direction — is a minimum. A more thorough review of the overall process, including payment terms, credit limit policies, and escalation procedures, is worth conducting annually or whenever a significant change in the business or its customer base occurs.
Q: Should I put a customer on credit hold if they are consistently paying late?
A: For customers with a persistent history of late payment, placing their account on stop — ceasing further supply until outstanding balances are cleared — is a legitimate and proportionate response. It should be communicated formally in writing, with clear reference to the outstanding amounts and the conditions for reinstatement. The decision requires commercial judgement about the value of the ongoing relationship versus the risk of continuing to extend credit.
Get in Touch
Implementing these steps will make a measurable difference to your credit control process. If you would prefer to hand the entire function to a professional team — freeing you to focus on running and growing your business — that credit control is here to help. Get in touch to find out how our service works.