Getting paid on time as a system, not a personality trait
Credit control is the repeatable process a business uses to get paid on time for goods or services it has already delivered on credit: deciding who gets credit and how much, invoicing on clear terms, and chasing overdue payments through a consistent escalation sequence. Done well, most of it runs on its own. This is about getting your business paid for work it has delivered, and it is a matter of process, not willpower.
Credit control is a system, not a personality
Most owners treat chasing payments as a character test. If invoices are going unpaid, the thinking goes, someone needs to be firmer, more organised, better at the awkward phone call. That framing keeps the problem stuck to a person. The more useful view is that credit control is a repeatable system: a defined credit control process that mostly runs itself, with a person stepping in only where judgement is genuinely needed.
The reframe: Chasing is a workflow problem, not a discipline problem. Fix the workflow and getting paid stops being personal.
This matters because the pain is rarely a lack of profit. A business can look healthy on paper and still be short in the bank, because the money it has earned sits in the sales ledger as unpaid invoices rather than cash. That gap between earning and being paid is the order-to-cash cycle, and every day an invoice stays in accounts receivable is a day of working capital you cannot use. Credit control closes that gap, and it sits inside your wider financial operations rather than standing apart from them.
To be clear on scope: this page is about your firm collecting what it is owed by other businesses, not job vacancies, personal debt or central-bank policy. It is also not debt collection, which is the fallback you reach for once the system has already failed.
How most businesses run it now (and why it breaks)
Picture how this runs in most small firms. One person, often the owner or a part-time bookkeeper acting as the finance function of one, holds the whole thing in their head: who owes what, who has been chased, who promised to pay on Friday. The only record is an aged-debtors spreadsheet they alone fully understand, and the chasing is a string of calls nobody enjoys making. It works until it doesn't, and it fails in three familiar ways: it is fragile, it is inconsistent, and it wears people down.
The fragility bites hardest. Because your credit control procedures live in one head rather than on paper, the week that person is on holiday or off sick the chasing stops dead: a bus-factor problem, where getting paid depends on one person being at their desk.
Getting paid starts before the invoice
The strongest credit control procedures do their work before a single invoice goes out. Much of what looks like a chasing problem later is really a decision that was never made at the start: who you gave credit to, how much, and on what written terms. Because credit terms are agreed back at the quote, the front end of your credit control process sits inside the sales conversation, not the accounts inbox.
Check: who gets credit
Before the first invoice, run a credit check rather than waiting for a first missed payment. A look at Companies House and a credit reference agency (Experian, Equifax and Creditsafe are common reference points) shows whether a new customer can pay.
Limit: how much credit
Set a credit limit that matches what you are willing to have outstanding at any one time. A limit caps your exposure to any single customer, so one late payer never puts the month at risk.
Terms and hygiene: the clean invoice
Agree payment terms in writing (net 30, for example) in your terms and conditions of sale. Then send an invoice that is hard to dispute: correct contact, a PO number where required, an unambiguous due date, and the right bank details.
Written terms matter for another reason: where no payment date is agreed, a statutory default applies later, so it pays to set one up front. Prevention beats chasing, and where cash is tied up despite a full order book, invoice finance can bridge the gap while these gates do the slower work.
Reading the ledger: aged debtors by shape, not total
Your aged debtors are the invoices you have raised but not yet been paid for, sorted by how long they have been outstanding. Most accounting software will produce an ageing report (sometimes labelled aged receivables) straight from your sales ledger, splitting every unpaid invoice into 30-day bands. The number that draws the eye is the grand total owed, but the useful signal is the shape: whether the weight sits in the fresh 0-30 column, or whether money is stacking up in the older bands.
| Bucket | What it means | What the shape is telling you |
|---|---|---|
| 0-30 days | Invoiced recently, not yet due or only just due. | Healthy weight to carry. This is normal trading, not a problem. |
| 31-60 days | Past typical terms and drifting. | The first nudge in your chase sequence has been missed or ignored. |
| 61-90 days | Clearly late and hardening. | A pattern, not an oversight. These need firmer, named contact. |
| 90+ days | Seriously overdue, some at risk of never landing. | Cash is trapped. A fat column here signals a collection problem. |
Two firms can be owed the same total and be in very different trouble. A fat 0-30 column is simply the cost of trading on terms. A fat 90+ column, at the identical total, is money you may have to fight for. That difference is why reading aged debtors by shape matters more than reading the headline figure, and it feeds into a single trend line worth tracking over time.
Days Sales Outstanding (DSO): also called debtor days, this is the average time between raising an invoice and getting paid. Roughly, take the money owed to you at the end of a period, divide it by the sales in that period, then multiply by the number of days in the period. There is no universal good figure: judge it against your own payment terms and watch the trend, because a rising DSO warns that cash is arriving more slowly even when sales look healthy.
The chase ladder as a state machine
Write your credit control process down as a set of named stages and something clicks: this is literally a state machine, a fixed set of positions an invoice can sit in with clear rules for moving between them. The technical term for automated reminders is the dunning process, more common in the US, but the idea is the same one we will call the chase ladder from here on. Each rung is an explicit state, and every one of your unpaid invoices sits on exactly one of them at any moment. Treat the timings below as sensible defaults you set yourself, not gospel: your terms, your customers, your call.
The dates above are only half the story. What separates a real system from a flat Day 1, Day 7, Day 14 calendar is that transitions fire on events, not just elapsed time. A part-payment branches the path onto the remaining balance. A logged promise to pay pauses the clock until the agreed date. A raised dispute diverts that invoice out of the chase and into a human queue, and crossing an age threshold escalates it a rung on its own. Written down like this, the machine is your credit control process in explicit form: it survives the credit controller's holiday instead of living in one person's head.
The key move: transitions fire on events, not just the calendar. A payment, a promise, or a dispute should move an invoice along the ladder the moment it happens, rather than waiting for a fixed day next week.
Automate the mechanism, keep humans for the judgement
Roughly four fifths of the ladder is mechanical, and software should run it without being asked. The remaining fifth carries the judgement, and that stays with a person. The line between the two is the most useful decision you will make when setting up credit control software, so draw it deliberately.
| Rung | Automate or human | Why |
|---|---|---|
| Due-date, first and firm reminders | Automate | Built into the accounting package, sent on time with the same wording every month. |
| Issuing the statement of account | Automate | A mechanical summary with no decision to make. |
| Receipting a part payment, logging a promise to pay | Automate | Records the event and moves the customer along the state machine. |
| Escalation flag at an age threshold | Automate | The clock does not forget or feel awkward about the reminder. |
| Putting a customer on stop or agreeing a payment plan | Keep a human | A credit hold or instalment arrangement weighs the relationship, not just the balance. |
| Disputed invoice, Letter Before Action, write-off | Keep a human | A disputed invoice needs understanding, and the legal or write-off call is a considered one. |
Automate the mechanism, keep the judgement human, and do not automate a relationship into the ground. This is the same automate-the-mechanism, keep-a-human-on-the-judgement pattern applied to money going out. For willing payers you can go further still: collecting by GoCardless or Bacs Direct Debit removes the chase entirely, because the money arrives on the due date without anyone lifting a finger.
Stopping supply is a judgement, not a threshold, so weigh the inputs rather than waiting for a single number. A dispute diverts to a person, while a silent non-payer who broke a promise trips the credit hold.
The UK legal layer, demystified
By the time an invoice reaches the top rungs of the chase ladder, the legal layer earns its place. It is not a first resort, and not something to reach for while a good customer is simply slow. Knowing your statutory footing strengthens your position long before court is on the table, because a chaser who clearly knows the rules gets taken seriously. What follows is how the mechanism works, not legal advice.
Interest and compensation: On overdue B2B invoices the Late Payment of Commercial Debts (Interest) Act 1998 gives you a statutory right to charge interest at 8% above the Bank of England base rate (check the current base rate on the day you invoice, since it moves), unless your contract sets its own late-payment rate. You can also claim fixed-sum compensation: £40 on a debt up to £999.99, £70 from £1,000 to £9,999.99, and £100 at £10,000 or more, plus the reasonable costs of recovering the debt.
If you agreed no payment date, an invoice becomes overdue 30 days after the customer receives it or after you deliver, whichever is later. Before court, the Pre-Action Protocol for Debt Claims (in force since 1 October 2017) expects a Letter of Claim, also called a Letter Before Action, giving the debtor 30 days to respond. The load-bearing detail: that protocol applies to individuals and sole traders, so chasing a sole trader triggers steps a limited-company debtor does not. If it stays unpaid, Money Claim Online starts a county court claim, which can end in a County Court Judgment.
If you supply goods, a retention of title (Romalpa) clause lets you keep legal ownership until you are paid. And when a debt is genuinely unrecoverable, a write-off or provision for doubtful debts is the honest end of the line.
Run it on what you already have, or build the credit control layer
You do not need dedicated credit control software to run a get-paid system well. What you need depends on the size of your ledger and how much branching your chase ladder actually does. Three tiers cover almost everyone.
| Approach | What it is | When it's enough / the limit |
|---|---|---|
| Your accounting package | Built-in invoice reminders in the package you already run (Xero, QuickBooks, Sage, FreeAgent). Chase on a calendar. | Enough for a small, well-behaved ledger. Limit: calendar-only, with no branching on events. |
| A dedicated AR tool | A dedicated accounts-receivable or credit control tool that adds chase cadences and reporting (Chaser, Satago, Credit Hound, Kolleno). | Fits when chasing volume outgrows the package. Limit: still someone else's model of your ladder. |
| Encode the ladder into your own system | The event-driven ladder built into your own system, so the transitions (part-payment, promise-to-pay, dispute, on stop) follow how your business actually decides. | Fits when you want the policy to run itself. This is what we build. |
For most businesses, tier one or tier two is the honest answer, and we will tell you when that is the case. The build only earns its keep once the ladder is intricate enough that documentation stops being reliable, because a written policy still leans on someone's discipline while an encoded one does not. The credit control that survives a holiday, a resignation, or a busy month is the version your system runs without being asked.
Common questions
Is credit control the same as debt collection?
No. Credit control is the ongoing system that gets you paid on time and stops debt going overdue. Debt collection starts after that system has failed: recovering money already owed, often through a third party or the courts.
Can I charge interest and costs on a late B2B invoice in the UK?
Yes. Statutory interest runs at 8% above the Bank of England base rate, plus a fixed sum (£40, £70 or £100 by debt size) and reasonable recovery costs, unless your contract sets its own rate. See the legal section above for the detail.
When should I stop supplying a customer who owes me?
Stop when a promise to pay has been broken, or when continuing to supply grows your exposure faster than they are paying it down. The automate-versus-judgement section sets out the full test to apply before you pause an account.
Turn chasing into a system that runs itself
Tell us how you get paid today and we will map the ladder that fits.
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