How to reduce your debtor days

Understand the number you're moving

Debtor days is the average time customers take to pay, calculated as your trade debtors divided by annual sales, multiplied by 365. If you turn over £600,000 a year and are owed £100,000 at any time, that's roughly 60 debtor days — two months of sales sitting in other people's bank accounts.

Every day you cut releases cash without a single pound of borrowing, and tightens your cash conversion cycle. This is the cheapest finance available to most businesses, because the money is already yours — it just hasn't arrived yet.

Fix the invoicing first

Most late payment starts with slow or sloppy invoicing, not difficult customers. Tighten the basics before you chase anyone:

• Invoice immediately on delivery, not at month-end — the clock only starts when the invoice lands.
• State clear payment terms and a due date on every invoice, not just "30 days".
• Get invoices right first time — a wrong reference or PO is a free excuse to delay.
• Make paying easy: include bank details and, where possible, a pay-now link.

A surprising share of overdue invoices are simply ones the customer can't process. Removing that friction speeds payment before any chasing is needed.

Set terms and chase systematically

Credit control works when it's a routine, not a reaction. Build a simple, consistent process:

1. Agree terms upfront, in writing, before you supply — including what happens if payment is late.
2. Send a polite reminder a few days before the due date, not after.
3. Follow a fixed escalation ladder: reminder, phone call, firmer notice, final demand — on set days.
4. Run an aged debtor report weekly so nothing slips through unnoticed.

A credit control checklist keeps this disciplined. Consistency matters more than aggression — customers pay the suppliers who reliably follow up first.

Add incentives, deterrents and screening

Beyond process, a few levers shift behaviour. A small early-settlement discount can pull cash forward, though weigh the cost against the cash-flow gain. You're also entitled under UK law to charge statutory interest and recovery costs on late commercial payments, which signals you take terms seriously even if you rarely enforce it.

Prevention beats cure: credit-check new customers before extending terms, and set sensible limits for larger accounts. For persistent offenders, consider deposits or upfront payment. Screening out the customers who were always going to pay late does more for your debtor days than chasing them ever will.

Know when finance fits instead

Some long debtor days are structural — large customers who simply pay on 60- or 90-day terms you can't change without losing the work. Where the gap is genuine and unavoidable, bridging it with finance is a legitimate choice rather than a failure of credit control.

A flexible working-capital facility lets you draw against the gap between doing the work and being paid, then repay as customers settle — so a slow-paying but profitable contract doesn't starve the rest of the business. Pair tight credit control with the right facility and late-paying customers stop dictating your cash flow. See working capital finance for the options.