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How to Improve Credit Control and Reduce Late Payments

How to Improve Credit Control and Reduce Late Payments

Late payments choke cash flow and create needless stress, especially for growing SMEs. Whether you’re based in Witney and Abingdon, or elsewhere in Oxfordshire, tightening up your credit control can free up cash, reduce overdraft reliance, and give you the confidence to plan ahead.

At Modus Accountants, we help local businesses put in place practical systems that get invoices paid on time without damaging client relationships.

1) Set Clear Terms From Day One

  • Include payment terms (e.g., 14 or 30 days) on every proposal and invoice.
  • State late payment interest (per UK Late Payment legislation) and admin fees.
  • Offer clear payment methods (bank transfer, GoCardless/DD, card link).

Top tip: For new or higher-risk customers, take a deposit or stage payments.

2) Invoice Fast, Invoice Right

  • Send the invoice as soon as the job milestone is met.
  • Make it error-free (PO numbers, VAT details, contact).
  • Attach any supporting docs the customer needs to approve payment.

Tooling: Xero/QuickBooks + invoice reminders + online payment links = faster cash.

3) Use a Reminder Cadence (That’s Friendly, Not Pushy)

  • T-3 days (before due): friendly reminder + payment link
  • Due date: short nudge
  • 7 days overdue: firmer tone + offer help (“Did our invoice hit the right inbox?”)
  • 14+ days: final reminder + late fee note + call the AP contact

Tip for Oxfordshire SMEs: Assign one person to “own” credit control each week—consistency wins.

4) Segment Your Customers by Risk

Treat customers differently based on risk and history:

  • Low risk: standard terms, automated reminders
  • Medium risk: shorter terms, deposit, DD mandate
  • High risk: upfront or milestone payments only

5) Offer Direct Debit (and Incentivise Early Payment)

  • Direct Debit (GoCardless) reduces friction and debtor days.
  • Consider a small early-payment discount for large, prompt-paying clients.

6) Make Collections Part of Your Weekly Rhythm

  • Run aged receivables weekly.
  • Call top 5 overdue accounts first.
  • Book a 30-minute team slot to clear roadblocks (disputes, missing POs, etc.).

7) Keep Credit Limits & Checks Up to Date

  • Set credit limits and review them quarterly.
  • For larger accounts, run basic credit checks and get director guarantees when sensible.

How Modus Helps SMEs in Witney, Oxford & Abingdon

  • Implement Xero/QuickBooks with automated reminders and payment links
  • Build credit control workflows and scripts your team can follow
  • Create a budget, cash-flow forecasts and debtor dashboards
  • Advise on terms, deposits, and staged billing
  • Optional Virtual Finance Director (VFD) support to drive results

FAQs – Credit Control & Late Payments

Q: What’s a realistic debtor days target?
Many SMEs sit at 45–60 days. With the right system, 30–35 days is achievable.

Q: Should I charge interest on late payments?
Yes, you can under UK law but use it judiciously to preserve relationships.

Q: Can software really help?
Absolutely. Automated reminders, online payments, and clear dashboards reduce delays and admin.

Next Steps

Want to reduce late payments and unlock cash? We’ll review your invoicing, terms, and credit control and set up a system that works.

📞 01993 225030 | 📧 hello@modus-accountants.co.uk 

Book your free 30 minute discovery  click here

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