Mostly the second. Automated chasing works on debt that's clean: the right amount, on the right invoice, undisputed, with someone at the customer to send it to. Old ledgers rarely look like that, so switching reminders on across them tends to chase the wrong people for the wrong sums. Historic debt needs a manual clean-up and a decision on each account first; automation then keeps new invoices from going the same way.
In this article
The short version
- Automated chasing works on clean debt, meaning the right amount on the right invoice with a live contact, and old ledgers rarely look like that.
- In the example, only £42,500 of £84,000 over 90 days was correct and chaseable, with the rest unallocated cash, unapplied credits, disputes or unreachable customers.
- Reconcile the ledger to the bank, apply credit notes, tag disputes and check Companies House before any old account goes back into chasing.
- In England and Wales a claim generally has to be brought within six years of the due date, and VAT bad debt relief is usually available after six months.
- Once the ledger is clean, automation keeps new invoices from ageing, with reminders either side of the due date, payment links and direct debit for recurring work.
What automation can and can't do with old debt
Automated chasing is good at repetition. It sends the reminder on the right day, on the channel each customer answers, with a link to pay, and it doesn't forget when the office gets busy. All of that assumes the thing being chased is correct.
New invoices usually are. The job has just been done, the contact is the person who booked it, and nothing has had time to go wrong. A debt that's been sitting for a year has had time for everything to go wrong, and often nobody has checked.
Take an HVAC maintenance firm with £84,000 showing as more than 90 days overdue across 70 invoices. After a proper reconciliation, it might turn out to be:
| What the £84,000 turned out to be | Amount | What it needs |
|---|---|---|
| Paid, but sitting as unallocated cash | £11,500 | Allocation, no chasing |
| Covered by credit notes never applied | £6,200 | Credit notes applied, no chasing |
| Disputed by the customer | £14,000 | Someone to resolve each dispute |
| Customer ceased trading or unreachable | £9,800 | Investigation, then likely write-off |
| Correct, undisputed and chaseable | £42,500 | Chasing, a plan or escalation |
Point automation at the full £84,000 and it would send reminders about £17,700 that nobody owes, escalate £14,000 of live disputes, and write to contacts who left years ago. In field services, where maintenance contracts renew on goodwill, a good customer chased for an invoice they've paid remembers it.
Even on the genuine £42,500, messages alone won't move much. Trials on long-overdue consumer debt have found that generic reminders and cleverer letter wording make little or no difference. Old debt usually needs a person on the phone.
How to clean up the ledger first
Treat it as a short project with an owner. Your accountant or bookkeeper can often help with the reconciliation.
- Reconcile the sales ledger to the bank. Match every receipt to an invoice and clear unallocated cash, largest amounts first.
- Apply outstanding credit notes and look for duplicate invoices, especially around any change of system.
- Tag every open dispute with what it's about and who owns it. Disputed invoices stay out of any automated chasing until they're settled.
- Check who pays at each customer, and check Companies House for any that have been dissolved or gone into insolvency.
- Note when each debt fell due, because that drives both the legal time limit and VAT relief.
Disputes in field services are often about evidence. A call-out charged when the engineer couldn't get access, parts the customer says weren't fitted, a job sheet nobody signed. Pull together the job sheet, engineer's notes, photos and PO before you call. Some disputes end when the customer sees a signed sheet; for fair ones, a partial credit note clears the rest. Record the agreed balance against the invoice, so the figure that goes back into chasing is one the customer has accepted.
What to do with each old account
Once the ledger is clean, each account usually needs one of these:
- Chase it, starting with a personal call, if it's correct, undisputed and the customer is still trading.
- Agree an instalment plan in writing if the customer accepts the debt but can't pay in full.
- Send a formal letter before action, then consider court or a collection agency, if they're ignoring you and the sum is worth pursuing.
- Claim in any insolvency, then write off, if the customer has been dissolved or can't be found.
Two time limits shape the decision. In England and Wales, a claim for an unpaid invoice generally has to be brought within six years of the payment falling due, so take legal advice on anything close to that. And once six months have passed since the due date (or the date of supply, if later) and the debt is written off in your VAT accounts, you can usually reclaim the VAT you paid on it, without proving the customer is insolvent.
Writing a debt off is an accounting step. It doesn't cancel what the customer owes, but it stops an old balance distorting your view of cash. Keep a short note of what you tried and why you wrote it off.
How to keep new debt clean
Now automation has something reliable to work on. Put the chaseable accounts on a schedule, collect instalment plans automatically, and start every new invoice clean: reminders before and after the due date, a payment link in every message, direct debit for recurring maintenance customers, and late fees applied from the due date if you choose to charge them.
Adfin does this from the invoices you import or upload, and matches every payment back to its invoice, including part payments and payments with no reference, so payments don't sit unallocated. Its AI agents can adjust timing and channel for each customer, send a statement when someone goes quiet, set up instalment plans and flag queries for your team, all within rules you approve. A monthly look at unallocated cash, unapplied credit notes and open disputes will show you early if the ledger starts to drift.
Common questions
Can automated chasing recover debt that's several years old? It can send reminders, but messages alone rarely move long-aged debt. It needs checking, a direct conversation and sometimes formal action.
Why shouldn't I switch on reminders across my whole aged debt report? If the ledger isn't reconciled, you'll chase customers who've paid, customers owed credit notes and customers with open disputes.
How long do I have to recover an unpaid invoice? In England and Wales, generally six years from when payment fell due. Scotland has separate rules, so take advice on any debt near the limit.
When can I claim VAT back on a bad debt? Once six months have passed from the later of the due date and the date of supply, and the debt is written off in your VAT accounts. The claim must be made within four years and six months.
Should disputed invoices be included in automated chasing? No. Take them out until the dispute is resolved, then chase the agreed balance.
Does writing off a debt mean the customer no longer owes it? No. It removes the balance from your books but doesn't cancel the customer's liability, although time limits on bringing a claim still apply.
Sources
- legislation.gov.uk - Limitation Act 1980, section 5 (accurate as of September 2026) https://www.legislation.gov.uk/ukpga/1980/58/section/5
- HM Revenue & Customs - Relief from VAT on bad debts (VAT Notice 700/18) (accurate as of September 2026) https://www.gov.uk/guidance/relief-from-vat-on-bad-debts-notice-70018
- Journal of Economic Behavior & Organization - Holzmeister et al., Nudging debtors to pay their debt: Two randomized controlled trials (accurate as of September 2026) https://www.sciencedirect.com/science/article/pii/S0167268122001329
- Digital Health (SAGE) - Saulitis, Personalized messaging enhances hospital debt collection while prosocial appeals fail (accurate as of September 2026) https://journals.sagepub.com/doi/full/10.1177/20552076241277035
- Adfin - Credit control (accurate as of September 2026) https://www.adfin.com/credit-control
