Debtor days: five moves that get customers paying faster

Debtor days, the average time customers take to pay you, is the cash flow number most small firms never measure and most feel. Every extra week of debtor days is a week of your money sitting in someone else's account, usually funding a bank facility you are paying for. Five practical moves bring it down.

Cash flow improving as invoices get paid faster

1. Invoice immediately, not at month end

The payment clock starts when the invoice lands, not when the work finishes. Firms that batch invoices at month end add up to 30 free days to every job. Invoice on completion or on agreed milestones, and same-day invoicing alone typically shaves a week off debtor days.

2. Make the payment terms impossible to miss

Terms buried in small print are terms nobody read. Put payment terms, due date, and bank details on the face of every invoice, and state them again in the engagement letter. 14 days stated clearly beats 30 days implied, and most B2B customers will simply pay to the stated date if it is visible.

3. Chase on a schedule, not on a feeling

Chasing when you remember means chasing late. Set a rhythm: a polite reminder three days before due date, a call on the due date, a firmer follow-up at seven days overdue, escalation at 30. Automate the first two steps through your accounting software so they happen whether you feel like it or not.

4. Make paying easy and late paying costly

Offer bank transfer details, card payment, and direct debit where practical; every extra step loses payers. And use the tools the law gives you: the Late Payment Act allows interest at 8 percent over base plus fixed compensation per invoice. You rarely need to charge it, but stating it in your terms changes behaviour.

5. Measure it and put a name on it

Publish debtor days monthly and assign one person to own the number. What gets measured and owned gets managed; what sits in the aged-debt report gets ignored. A 10-day improvement on £500,000 of annual sales frees over £13,000 of working capital, which is a return no savings account offers.

If chasing is eating hours your team should spend elsewhere, Finex Outsourcing runs accounts receivable outsourcing services for UK firms: scheduled chasing, reconciliation, and a debtor-days number that actually moves.




 

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