What the law actually says #
Worth setting out plainly, because a surprising number of trade suppliers believe their terms are whatever the customer says they are.
| Question | What GOV.UK states |
|---|---|
| When is payment late if nothing was agreed? | 30 days after the customer gets the invoice, or after you deliver, whichever is later |
| Maximum agreed terms, business to business | 60 days, unless a longer period is fair to both businesses |
| Maximum agreed terms, public authorities | 30 days |
| Statutory interest, business to business | 8 per cent plus the Bank of England base rate |
Recovery costs are fixed by debt size.
£40
Debt up to £999.99
GOV.UK, claim debt recovery costs
£70
Debt of £1,000 to £9,999.99
GOV.UK, claim debt recovery costs
£100
Debt of £10,000 or more
GOV.UK, claim debt recovery costs
Two details get missed. You cannot charge a different rate where the contract specifies one, and you cannot apply a lower rate to a public authority. And alongside the fixed sum you can also claim reasonable costs of each attempt to recover the debt, which is a separate entitlement from the fixed amount.
Why the chase takes days rather than minutes #
Almost none of credit control is asking for money. Here is what actually happens between deciding to chase and a chase going out.
-
Work out what is genuinely overdue
Against agreed terms per account, not a blanket 30 days, and net of credits that may or may not have been raised.
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Work out whether it is disputed
A queried invoice is not a late invoice, and the query usually lives in somebody's mailbox rather than the ledger.
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Assemble the evidence
The order, the proof of delivery, the invoice, any credit note, and whatever was said last time.
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Find the right person
Rarely the person who placed the order, often a shared accounts mailbox, sometimes a portal with its own login and its own rules.
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Write it
Same facts, different wrapper, at a tone calibrated to how much you want to keep the customer.
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Record it Most often skipped
So the next chase escalates rather than repeats.
Six steps, of which one is a decision. The rest are retrieval, matching and formatting, and they are why a ledger with a hundred overdue invoices on it does not get chased in a morning.
The chase that repeats itself is the expensive one #
When the record of what was already said does not survive from one chase to the next, every contact starts from zero. The customer notices this faster than you do. A business that receives the same polite first reminder three times has learned that nothing follows the first reminder, and adjusts accordingly.
Building a consequence requires a record of the sequence, which is precisely the bookkeeping that gets dropped when the credit controller is also covering the counter.
What you can find out before extending credit #
Some of the work belongs earlier, at the point the trade account is opened, and some of it is published and free.
Companies House gives you registered address, incorporation date, current and former officers, filing history, document images, mortgage charge data, previous names and insolvency information at no cost, and you can set up free email alerts when a company changes its record.
For larger customers there is more. Under the payment practices reporting duty, qualifying UK companies and LLPs must publish, twice a year and within 30 days of each period ending, four things.
- The average number of days they take to pay
- The percentage of payments made in 30 days, 31 to 60 days and 61 days or more
- The percentage not paid within agreed terms
- Their standard payment terms
Which customers have to report
From 6 April 2025 the thresholds are £54 million turnover and £27 million balance sheet total, alongside 250 employees, with a business in scope if it exceeds at least two of the three.
Which parts run on rules #
Runs on rules
- Working out what is overdue against each account's own terms
- Excluding anything under genuine query, if queries are recorded anywhere
- Assembling order, POD and invoice into one pack
- Sending a reminder that knows what the last one said
- Escalating on a schedule rather than when someone remembers
- Calculating statutory interest and the fixed recovery sum
- Flagging an account whose payment behaviour has changed
Needs a person
- Deciding to stop an account
- Deciding whether to actually charge the interest you are owed
- Agreeing a payment plan with a customer in trouble
Whether to charge the interest you are owed is a relationship call, every time.
What to measure #
Three numbers, for one month.
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How many overdue invoices were chased at all
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How many chases were a repeat of a previous chase rather than an escalation
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How many chases stalled waiting for a document rather than waiting for the customer
This is the number that points at your own paperwork rather than at your customers.
The chasing payment tool turns the days into money, and the admin time calculator covers the wider office week.