Most late payments are invoices nobody asked about until they were already late.
Good credit control starts before the invoice, with credit checks and clear terms. Send accurate invoices promptly, remind customers before the due date, chase on fixed days after it, escalate by phone and to senior contacts, and pause supply or start formal recovery at a set point. Resolve disputes quickly and measure DSO and overdue balances every week.
Check new customers' credit before agreeing terms, set a credit limit, and agree payment terms in writing. Get the name and email of the person who actually approves payments, not just the buyer.
Invoice the day goods ship or the work is done, with the purchase order number, the correct entity and address, and clear payment details. A wrong PO number is one of the most common reasons an invoice sits unpaid.
An example schedule; adjust the days to your terms and customers:
| When | Action |
|---|---|
| 5 days before due | Friendly reminder with the invoice attached |
| Due date | Statement showing the amount now due |
| 7 days overdue | Email asking for a payment date |
| 14 days overdue | Phone call to the payments contact |
| 21 days overdue | Escalate to a senior contact on both sides |
| 30 days overdue | Final notice; consider putting supply on hold |
| 45 days overdue | Decide on formal recovery |
The value is in consistency: every invoice gets the same treatment, so nothing drifts.
When a customer says they won't pay because of a problem, log the dispute with an owner and a target date, and pay attention to it fast. Disputed invoices age quickly, and undisputed lines on the same invoice should still be paid.
Allocate receipts to invoices the day they arrive. Unallocated cash makes customers look overdue when they aren't, and wastes chasing time.
Days sales outstanding (DSO) = trade receivables ÷ credit sales for the period × days in the period. Track it with overdue balances by age band and the top ten overdue customers. See DSO, best possible DSO and CEI for better measures.
Receipts patterns from credit control feed your 13-week cash flow forecast.
UK: for business-to-business debts, the Late Payment of Commercial Debts rules let you claim statutory interest of 8% plus the Bank of England base rate, unless your contract sets a different rate. You can also claim fixed debt recovery costs of £40 for debts up to £999.99, £70 for £1,000 to £9,999.99, and £100 for £10,000 or more. If no payment date is agreed, payment is late 30 days after the customer receives the invoice or you deliver, whichever is later.
US: there's no single federal equivalent. Late fees and interest depend on your contract terms and state law, so put them clearly in your terms and on your invoices.
Work out DSO and the cash tied up in late payers. Free to use online.
The Credit Control & Receivables System calculates ageing, DSO, best-possible DSO and CEI from the ledger, shapes a bad debt provision to IFRS 9 / ASC 326 logic and requires independent approval for credit limits and write-offs. Excel, no macros, one-time price.
Before it's due. A reminder a few days before the due date catches missing approvals and wrong PO numbers while there's still time to fix them.
It depends on your customer relationships and your terms. In the UK, statutory interest is available for business debts; elsewhere it depends on your contract and local law.
Compare DSO with your payment terms: a DSO close to your standard terms means customers pay roughly on time. The trend matters more than a single figure.
Last updated 18 October 2026. General guidance for finance teams; check it against your own policies, systems and local rules.