Four numbers cover most of what you need: the share of invoices paid on time, the share that go overdue, debtor days, and the hours your team spends collecting. Work them out monthly and watch the trend over several months, because a single snapshot can mislead, particularly if you collect a lot by direct debit.
In this article
The short version
- Track four numbers: on-time rate, overdue rate, debtor days and hours spent collecting.
- Work them out monthly and watch the trend over several months.
- Rank customers by how often they pay late; the ledger-wide average hides them.
- Keep direct debit out of days-late figures, because Bacs settles after the due date.
- Reminders sent and total debtors in pounds can move without your collections changing.
The four numbers worth tracking
| Metric | What it tells you | How to work it out |
|---|---|---|
| On-time payment rate | Whether customers pay by the date you set | Invoices paid on or before the due date, divided by invoices due in the period |
| Overdue rate | How many invoices slip at all | Invoices that passed their due date unpaid, divided by invoices due in the period |
| Debtor days | How long your money sits with customers | Trade debtors divided by credit sales for the period, multiplied by the days in the period |
| Collection hours | What your current approach costs you | Time spent chasing, checking and matching payments each month |
The first two look like mirror images, but they answer different questions. Your on-time rate tells you how well the system works when it works. Your overdue rate catches every invoice that slipped, including ones still unpaid, which is why it tends to move first when you change how you collect.
Count invoices rather than value for both, and keep a value-weighted version alongside if your largest invoices behave differently from the rest. They often do, because big invoices tend to need internal approval.
Collection hours are the one many businesses don't measure. Government research found that businesses affected by late payment spend an average of 86 hours a year chasing it, which gives you something to set your own figure against.
How to read them
Work debtor days out monthly. An annual figure smooths over the month that went wrong, and you'll want to see it.
Look at the trend over six months or more, not one reading. Your terms, sector and customer mix all pull these numbers around, so there isn't a universal benchmark to hit. Your own direction of travel is the useful part.
Split your on-time rate by customer. Rank every customer with five or more invoices by how often they paid after the due date. Late payment tends to come from a small group of the same names, and a ledger-wide average hides that completely. The ranking also tells you where your chasing time should go.
If a lot of what you collect comes in by direct debit, read days-late figures with care. A direct debit is collected on the due date, or the next working day, and then takes a few working days to reach your account, so a days-late figure based on when money lands partly measures that settlement time, not your customers. Use your on-time and overdue rates for those invoices, or report them separately.
Numbers that can mislead
Some figures get reported more often than they deserve. Each of these can move while your collections stay exactly where they were:
- Reminders sent: it measures your effort, and a month with more reminders isn't a month with more cash.
- Total debtors in pounds: it rises as you grow, and debtor days already accounts for that.
- Average days late: a few very old invoices pull the average far above what's typical, so use the median, and keep direct debit out of it.
- Debtor days compared year on year with no context: a quiet quarter can improve it for reasons that have nothing to do with credit control.
- A month-end snapshot: many customers pay in month-end runs, so a reading taken just after them looks better than the month really was.
- On-time rate by payment method: wallet payments often look more punctual than bank transfers, but compared inside one business the gap mostly disappears. The difference is largely about which customers use which method.
How to keep the numbers up to date
The four numbers are only as good as the records behind them. If payments sit unmatched for a week, your overdue rate and debtor days are wrong for that week, and if chasing happens in whoever's spare half hour, nobody's counting the hours.
Adfin matches each payment to its invoice, including part payments and missing references, and syncs it back to Xero or QuickBooks, so your ageing is current when you pull the numbers. Its Customer Agents chase overdue invoices over email, SMS or WhatsApp on rules you set and approve, which takes much of the routine chasing out of your collection hours.
Common questions
What are the most important credit control KPIs? On-time payment rate, overdue rate, debtor days and hours spent collecting. Track them monthly and look at the trend.
How do you calculate debtor days? Divide trade debtors by credit sales for the period and multiply by the number of days in the period. Do it monthly so a bad month shows up.
What is a good on-time payment rate? There's no universal benchmark, because terms and customer mix vary so much. Your own trend over several months tells you more.
Should I track average days late? Use the median instead, because a few very old invoices pull the average up. Keep direct debit out of it, since the money reaches you a few working days after it's collected, which can make an on-time payment look late.
What is the difference between debtor days and DSO? They're the same measure under two names. Debtor days is the usual UK term and days sales outstanding the more common term in software.
How much time should credit control take? There's no target figure, but government research puts the average at 86 hours a year for each business affected by late payment, which is a useful yardstick.
Sources
- Department for Business and Trade - Late payments research: impact on the UK economy (accurate as of October 2026) https://www.gov.uk/government/publications/late-payments-research-impact-on-the-uk-economy
- GOV.UK - Late commercial payments: when a payment becomes late (accurate as of October 2026) https://www.gov.uk/late-commercial-payments-interest-debt-recovery/when-a-payment-becomes-late
- Bacs - The little Bacs guide to Direct Debit (accurate as of October 2026) https://www.bacs.co.uk/media/ezwlg0dn/little_bacs_guide_to_direct_debit-v2.pdf
- Adfin - Credit control (accurate as of October 2026) https://www.adfin.com/credit-control
