Credit Control as Routine: A Ten-Point System for Getting UK Invoices Paid

Most business owners do not enjoy chasing invoices. The task feels awkward, repetitive and slightly confrontational. Yet the cost of avoiding it is rarely confined to one overdue balance. Late payment disrupts payroll, VAT and supplier payments, and it can turn a profitable month into a cash-flow problem.

The more useful response is to stop treating credit control as a personal chore and start treating it as a normal business process. The following ten-point system is designed for UK SMEs that sell on credit and want a routine that works before a customer becomes a problem.

1. Set a written credit policy

A credit policy sets out who can buy on credit, what terms apply and what happens when an invoice is overdue. It need not be lengthy, but it should be consistent. Decide whether new customers must complete a credit application, whether deposits are required and which customers are eligible for extended terms.

The policy should be approved by the owner or board and applied without exception. Informal exceptions are how slow payers learn that terms are negotiable.

2. Check credit before extending terms

Credit checks are not a guarantee, but they provide a useful discipline. For limited companies, Companies House records, filed accounts and credit reference agency reports can reveal dormant status, late filing, adverse county court judgments or a pattern of director resignations. For sole traders and partnerships, checks may be more limited, which makes trade references and deposits more important.

Set a credit limit for each customer and record it in the sales system. If an order exceeds the limit, require approval before dispatch. This single control prevents many small debts from becoming large ones.

3. Make terms clear before the first order

Terms should be supplied with the quotation, referenced on the order confirmation and repeated on the invoice. State the payment period, accepted payment methods, when ownership passes and what happens if payment is late. If the business relies on statutory interest or compensation for late payment, the contract should not contradict that position.

Where the customer is another business, the Late Payment of Commercial Debts (Interest) Act 1998 provides a statutory framework for late payment. Contracts can vary the position, so the terms matter. For consumer customers, different rules apply and should be checked separately.

4. Invoice promptly and accurately

Many late payments begin with a late or unclear invoice. Issue invoices on dispatch or completion, not at month-end. Include the purchase order number, a clear description, the due date and the correct legal entity name. Send the invoice to the right person, not simply to a general enquiries address.

Ask new customers where invoices should be sent and whether their accounts payable process requires a portal upload or a specific reference. A five-minute question at onboarding can save weeks of chasing.

5. Confirm receipt

For larger invoices, send a short confirmation email a few days after issue. This is not a demand for payment. It is a check that the invoice has been received and is in the approval process. It also creates a record that the customer had notice of the debt.

6. Run a weekly aged debtor review

Credit control works best as a short, frequent routine rather than an occasional burst of activity. Once a week, review the aged debtor list and identify invoices that are due, overdue by seven days, overdue by fourteen days and overdue by more than thirty days. Each bucket needs a different action.

The review should produce a list of calls and emails for the week. Record what was said and when. If a customer promises payment on a specific date, diarise it and follow up if the promise is broken.

7. Use escalation scripts

The first reminder should be polite and factual. The second should be firmer and ask for a payment date. The third should state that further supply may be suspended and that statutory interest may be claimed. Scripts help staff keep the tone consistent and prevent the owner from having to improvise every conversation.

A useful rule is to separate the relationship from the process. The sales team can maintain the commercial relationship while the credit controller applies the policy. Small businesses often combine both roles, but the conversation should still follow the same stages.

8. Claim statutory interest where appropriate

For business-to-business debts, the late payment legislation allows a supplier to claim statutory interest and fixed compensation in certain circumstances. The right to do so may depend on the contract and whether the customer is a public authority or another business. Interest can be a useful lever, but it should be applied consistently rather than used as an empty threat.

Before claiming, check the contract, confirm the debt is undisputed and calculate the amount accurately. A poorly prepared claim can undermine credibility.

9. Know when to stop supplying

Continuing to supply a customer who does not pay is a credit decision, not a customer-service decision. The credit policy should state when accounts are placed on stop and who can authorise an exception. If an exception is made, require a payment plan in writing and review it weekly.

For persistent non-payment, consider a formal letter before action and, where the debt justifies it, a county court money claim. Legal advice should be taken where the amount is significant or the customer disputes the debt.

10. Review the system monthly

At the end of each month, review the numbers: days sales outstanding, the proportion of invoices paid late, the age of the debt ledger and the number of customers on stop. These measures show whether the process is working. They also highlight customers whose terms should be tightened or whose credit limits should be reduced.

The weekly routine that makes it work

Credit control does not need to dominate the week. A focused thirty-minute session can be enough if it is repeated. Print or open the aged debtor list. Identify every invoice that has passed its due date. Send the appropriate reminder. Make the difficult calls. Record the outcome. Escalate anything that has breached the policy.

The owner’s role is to review the exceptions, not to chase every invoice personally. That distinction matters in a small business where the owner is also the salesperson, operations manager and finance director. A routine system protects the owner from having to remember every debt and protects the business from the cash-flow shock of discovering a large overdue balance too late.