Credit control is everything a business does to turn invoices into cash: agreeing payment terms, making it easy to pay, following up what's late and deciding when to escalate or stop. Most of the result is settled before the invoice goes out, by the terms you agree and how you arrange to collect, so chasing is only one part of the job.
In this article
The short version
- Credit control is four jobs: agree terms, make paying easy, follow up, and escalate or stop.
- Most of the result is decided before the invoice goes out, by your terms and how you collect.
- Collecting automatically, by direct debit or a saved method, leaves far fewer invoices unpaid than asking each time.
- On business invoices you can claim statutory interest at 8% above base rate plus £40 to £100 compensation.
- Track on-time rate, overdue share, debtor days and time spent collecting.
What credit control covers
Credit control covers everything between agreeing to do the work and having the money in your account. It breaks into four jobs, in the order they happen:
- Agree how you'll be paid: the terms and the method.
- Make paying easy, so a customer who's happy to pay isn't held up by your process.
- Follow up what hasn't arrived, on a schedule and in a steady tone.
- Escalate what still won't arrive, and decide when to stop.
Most businesses think of credit control as the third job. But the first two decide how much chasing you're left with, and they're much cheaper to get right.
Credit control is also different from debt collection. Credit control covers getting paid on time, and most of it happens before an invoice is due. Debt collection starts once a debt is well overdue and often involves an agency or the courts.
The cost of late payment is well documented. Research for the Department for Business and Trade and the Small Business Commissioner puts it at almost £11 billion a year to the UK economy. Around £26 billion is owed in late payments at any one time, an average of £17,000 for each business affected, and businesses that spend staff time chasing average 86 hours a year on it.
Decisions to make before you invoice
Five decisions shape most of your results, and each is easiest to make at the start of a customer relationship.
| Decision | When to make it | What happens if you don't |
|---|---|---|
| Payment terms | Before the work starts | The customer's terms or the legal default apply |
| How the money arrives | Before the first invoice | Every invoice becomes a fresh request to pay |
| Who receives and approves invoices | At onboarding | You find out on day 30 it needed a second signature |
| Your follow-up schedule | When the invoice goes out | Chasing waits until someone has a spare hour |
| When to escalate and when to stop | In your written policy | Escalation happens in frustration, or not at all |
Start with terms. If you agree nothing, the law treats a business invoice as late 30 days after the customer receives it or after you deliver the work, whichever is later. Agreeing your own terms in writing, and printing them on every invoice, removes any argument about when payment was due.
How you collect matters more than most people expect. In Adfin's payment data, invoices set to collect automatically were paid noticeably more often than those where the customer had to act on a payment request. Most of the automatic group were direct debits under a mandate the customer had already signed, so the two groups aren't identical, but it's a gap that chasing harder is unlikely to close.
For customers you bill every month, that points to a direct debit mandate signed at onboarding. For one-off invoices, a payment link lets the customer pay by card, Apple Pay, Google Pay or pay by bank without typing in your bank details.
Accountancy practices have the same four jobs and one extra difficulty: the invoice goes to a client you also advise, so chasing it can feel awkward. Capturing the direct debit mandate when the engagement letter is signed takes most of those conversations away, and Adfin integrates with Socket so the mandate can be signed with the proposal.
Then find out who approves payment. An invoice sitting with someone who can't authorise it tends to stay there until somebody notices, and one question at onboarding avoids that.
How to follow up and escalate
When an invoice is late, a steady run of reminders tends to work better than the occasional stern email. A schedule you set when the invoice goes out tends to happen, while one you plan to work out after the due date gets pushed back by a busy week.
A common pattern starts with a check before the due date, moves through two short reminders in the first week or so, then a phone call, and ends with a formal notice once the invoice is about a month late. Escalate by changing the channel and the formality, keep the tone the same, and put a way to pay in every message.
Many late payments come down to admin rather than refusal, so it helps if the first reminders read that way. Once you're talking to the customer, try to work out whether they can't pay or simply haven't prioritised you, because the two need different handling: an instalment plan for the first, a specific date for the second.
On business-to-business invoices you're entitled by law to interest at 8% above the Bank of England base rate, which is 11.75% a year with the base rate at 3.75%, plus fixed compensation of £40, £70 or £100 per invoice depending on its size. The right applies even if your contract doesn't mention it, yet few businesses appear to use it: in the same government research, only 5.9% had introduced or increased a penalty on overdue invoices.
If the formal notice doesn't work, the next steps are a letter before action, then a choice between a payment arrangement, a debt collection agency and a claim through the small claims track. Sometimes the right call is to stop. When pursuing a debt would cost more in fees and time than you'd realistically recover, writing it off frees your time for invoices you can still collect.
How to measure it and who should do it
Four numbers tell you whether your credit control is working:
- the share of invoices paid on or before the due date
- the share that go overdue at all
- debtor days, or lock-up in a practice, for the money-weighted view
- the time you and your team spend collecting
Watch how they move over a few months, because a single month can mislead.
Then look at who does what. The decisions above need a person: which terms to offer, which clients go on direct debit, when to push and when to let a good customer off. The follow-up mostly doesn't. It's the same reminder and the same check against a different name each week, and it's the part that slips when you're busy.
Software handles that repetitive part well. Adfin chases overdue invoices over email, SMS and WhatsApp on the schedule you set, from your own email domain and with a payment link in every message, and matches payments back to invoices in Xero or QuickBooks. Its collection agents work within rules you approve, choosing the timing and channel for each customer, adding statutory late fees, offering instalment plans and sending statements, so your own time goes on the conversations that need you.
Common questions
What is credit control? The work of turning invoices into cash: agreeing terms and a payment method, making it easy to pay, following up late invoices and escalating the ones that still aren't paid.
What's the difference between credit control and debt collection? Credit control is everything you do to get paid on time, mostly before an invoice is due. Debt collection starts once a debt is well overdue and often involves an agency or the courts.
How much does late payment cost UK businesses? Government research puts the cost to the UK economy at almost £11 billion a year, with around £26 billion owed in late payments at any one time.
When should I start chasing an invoice? Before it's due, with a quick check a few days ahead that it's been approved. Then follow up with a brief reminder once the due date has passed.
Can I charge interest on late payments? Yes, on business-to-business invoices, at 8% above the Bank of England base rate (11.75% a year at the current 3.75%), plus £40 to £100 of fixed compensation per invoice. The right applies even if your contract doesn't mention it.
Which credit control numbers should I track? Your on-time payment rate, the share of invoices that go overdue, debtor days and the time spent collecting. The number of reminders sent tells you very little.
Sources
- Department for Business and Trade and Small Business Commissioner - Late payments research: impact on the UK economy (accurate as of October 2026) https://assets.publishing.service.gov.uk/media/688a089a6478525675738ff9/late_payments_research_impact_on_uk_economy.pdf
- GOV.UK - Late commercial payments: charging interest and debt recovery (accurate as of October 2026) https://www.gov.uk/late-commercial-payments-interest-debt-recovery
- GOV.UK - Claim debt recovery costs on late payments (accurate as of October 2026) https://www.gov.uk/late-commercial-payments-interest-debt-recovery/claim-debt-recovery-costs
- Bank of England - The interest rate (Bank Rate) (accurate as of October 2026) https://www.bankofengland.co.uk/monetary-policy/the-interest-rate-bank-rate
- Adfin - Credit control (accurate as of October 2026) https://www.adfin.com/credit-control
