0800 9774848


101 ways to improve your credit management


Discover how to improve your credit management with this definitive guide.

Offering credit terms to customers can give you a competitive advantage when winning new business. But in order to maintain a healthy cash flow whilst you wait for payment, you need to have an effective credit management strategy in place.

Managing this function can be challenging but getting it right is vital for success. We’ve therefore taken the time to compile this definitive guide to improving your credit management, and hope that it will help you maintain a healthy cash flow.



Plus, for an even more definitive guide to improving your credit control performance download this Essential Credit Management Handbook, which goes into more detail on how to improve your results.


The most important aspect of the credit control process is the actual process itself.

1. Set out a day-by-day strategy

By clearly setting out a day-by-day strategy from the moment the order is placed until the invoice is paid, your team can adopt a co-ordinated and professional credit control procedure.

2. Decide your process for late payments

Ensure your strategy has a clearly defined procedure for dealing with late payments. This can include courtesy calls, letters, late payment interest, pausing services or passing the debt to a collections agency.

3. Train staff

Once your team have agreed the timetable, the next task is to introduce it to your employees and ensure that the necessary levels of training are provided.

4. Ensure policy is stuck to

For your credit control process to have the most effect, all stages need to be adequately completed and meticulously stuck to.

5. Communicate this policy to all customers

Make sure your customers know exactly when they will be expected to be pay and what will happen when they don’t. This can be documented in your terms and conditions.

6. Assess your performance

Analysing your performance is key to finding where you can make improvements. For example, if you are commonly being paid late, you can take proactive steps to improve your credit control or perhaps look into outsourcing this function to credit control experts. Take a look at these 6 KPIs to help you measure your credit control.

7. Compare your performance to industry norms

Look at the average debtor days for your industry. How does your business compare? This can provide good insight into the success of your efforts.

8. Make necessary changes

If your review has identified room for improvement it’s vital that you take action to improve your credit management processes before the issue gets out of hand.

9. Know what you can afford to offer on credit

Your cash flow may be impacted by having to wait for payment, even if customers do pay within terms. There is also the potential issue of non-payment or late payment which can leave your business vulnerable.

10.Ensure you have adequate resources to do it well

Managing your credit control in-house requires significant resources. If you don’t have the necessary internal resource it could be cost effective to explore outsourcing options.

11. Learn from your competition

Is your competition offering more favourable credit terms than you are? This could result in customers going elsewhere instead.


12. Get the right balance

When deciding on your credit terms and policy it’s vital you strike the right balance so that you remain competitive whilst being stringent enough to protect your cash flow.

Take a look at this timeline to getting paid for more tips on how to create a clear credit control procedure.


Do you know who you’re doing business with? How confident can you be that they’ll pay on time?

13. Use account opening forms

You can obtain all the necessary business information you need about a customer by asking them to complete an account opening form.

14. Know the full registered business name

Many businesses have a trading name for marketing purposes and a registered name for formal correspondence. The registered name is vital in the event the customer fails to pay and you need to take further action.

15. Check the business VAT number

Checking to see if your customer’s VAT number is genuine allows you to verify that the business you think you are trading with is actually who they say they are.

16. Confirm who invoices should be addressed to

Always get the contact details for the most relevant person to send the invoice to. Getting these details wrong could cause delays in payment so make sure you check them.

17. Know who is responsible for accounts payable

Especially in larger businesses, often the person you deal with won’t be in charge of paying you. So make sure you have details for accounts payable so you can contact them directly if any issues arise.

18. Perform a credit check on application

Credit reports provide valuable insight into the financial status of your customers. You can use this information to decide how much credit you are willing to extend.

19. Credit check long-term customers too

Check the creditworthiness of your repeat customers on an ongoing basis, not just before the first order. Circumstances change and a previously prompt payer could suddenly find themselves in difficulty.

20. Check when large businesses pay their suppliers

Large businesses are now required to report on their payment practices. Looking at these reports will reveal their standard payment practices and performance.

21. Look at their filed accounts

Take a look at your customer’s filed accounts. The information provided could give you insight into their financial health. Late filings in particular could be a sign of trouble.

22. See if they are a Prompt Payment Code signatory

Prompt Payment Code signatories pledge to pay suppliers on time and adopt good payment practices.

23. Check for CCJs

Credit reports and the Register of County Court Judgments (CCJs) will reveal if your customer has any CCJs against them, which shows that they have a history of not making payments.

24. Build strong relationships

Building a strong relationship with your customers will encourage them to purchase more goods and services from your business whilst also improving your chances of getting paid on time.

25. Keep in touch

Make regular courtesy calls to your customer to continue building that relationship and ensure that your invoice stays front of mind.

26. Say thank you

It’s always nice to say thank you when you receive payment. Not only is it polite, it also shows you’re grateful for their custom, improves customer relations and can lead to subsequent sales.

27. Look out for warning signs

There are a number of early warning signs that indicate your customer might not pay you. Keeping a watchful eye for these could help you spot a problem before it damages your cash flow.

28. Keep a watch on industry news

The way different sectors are currently performing could indicate if a business is likely to experience any economic factors which could affect their ability to pay you.

29. Use credit circles

Another way to check the creditworthiness of your customers is to join a credit circle where you can share and access important creditor trends with fellow companies.

30. Set expectations

Always let your customers know when you will next be in touch. This manages their expectations and demonstrates that timely payment is important to you and that you have an efficient credit control strategy in place.


31. Train employees to flag any odd financial behaviour

It’s important to make sure that all customer-facing employees have the necessary training to spot and report any odd financial behaviour.

For more information on what you need to know about your customers take a look at these essential questions to ask


When it comes to improving credit management one of the most overlooked tactics is to create a more efficient invoicing procedure.

32. Send as soon as possible

As soon as your goods or services have been provided send your customer an invoice. Any delay you make will give your customer an excuse to stall payment.

33. Use e-invoicing

Transitioning to a digital invoicing system could significantly speed up your invoicing process and improve your cash flow as it avoids the need to print, post and process hard copies.

34. Ensure it’s addressed to the right person

Make sure when sending the invoice you address it to the most relevant person. If you’re not sure who this is, ask, or you could face a long wait for your payment.

35. Display credit terms prominently

Sending an invoice is pointless if you don’t tell the customer when they need to pay by. Always include your credit terms in a prominent position that your customer can clearly see.

36. Include exact payment date

Clearly provide an exact date that payment must be received by. This will reduce the chances of your customer missing the deadline date.

37. Offer a range of payment methods

It’s always good to give customers a choice, so where possible try to offer a range of payment methods and make sure these are clearly stated on your invoices.

38. Check your numbers

Any mistakes – no matter how big or small – could lead to disputes and delays in payment. So always check that you have got your numbers right.

39. Discuss any additional fees before sending

If you need to bill for more than originally discussed speak to the customer first. Do not just assume they will be happy with any extra fees. It could lead them to refuse to pay the outstanding balance.

40. Proofread

Not only do mistakes look unprofessional and reflect badly on your business but they could lead to disputes on payment. So always proofread your invoices before sending.

41. Make a courtesy call to confirm receipt

Do not assume that your customer has received the invoice and will pay accordingly. Follow up with a courtesy call to check that they have received your invoice and their intentions to pay.

42. Keep a copy

It is essential to keep back-up files of all invoices not only for your own reference, but additionally in case there is a dispute with payment. You never know when you might need to refer to these.

43. Keep it simple

A professional and effective design will increase your chances of being paid on time. So, keep it simple and only include the information necessary to getting paid on time.

44. Pay particular attention to foreign debtors

Make sure that your IBAN and BIC are included on invoices to allow foreign debtors to pay. Also ensure that you are able to accept currency payments into your account if billing in currency.


45. Explain your procedure for late payment

Point the customer towards your credit control procedure which should be in your T&Cs. This demonstrates that you take a strong stance against late payment and can reduce the chances of being paid late.

For more tips on invoicing effectively take a look at this post on how to create the perfect invoice.  


Your T&Cs are a major component of keeping your business competitive and they can also be fundamental to maintaining a healthy cash flow.

46. Make sure these are on all correspondence

Referring to your T&Cs throughout your business relationship will help you to manage expectations and avoid any potential surprises in the future.

47. Regularly review and update

Reviewing how your T&Cs are working in practice will allow you to spot trends and adjust your processes in order to improve your cash position.

48. Compare to your competitors

Are your competitors offering more favourable terms than you are? This could be costing you business.

49. Explain procedures for all scenarios

Think of all the scenarios of what could possibly go wrong with a sale and then set out what you would do in each case. This should include late payment, cancellations and returns and disputes.

50. Pay particular attention to your late payment procedure

By demonstrating from the outset that your business doesn’t tolerate late payment and specifying the actions that would be taken, the chances of getting paid within terms will improve considerably.

51. Make sure they are user friendly

Make sure your T&Cs are user friendly and that the language is appropriate for your customers. Hiding everything on one page in a small font may deter customers from doing business with you.

52. Consult an expert

By consulting an expert such as a lawyer, you will ensure that your terms and conditions are as effective as possible and ultimately maximise the protection for your business.

53. Provide adequate training

Conduct regular staff training on your process so that you always have the right documentation to fall back on when you take enforcement action against customers in breach.

54. Obtain customer signatures

Ensure that the customer’s signature is obtained before the point of sale, confirming their acceptance of your T&Cs. Nowadays, simply referring them to a webpage isn’t enough.

55. Consider including personal guarantees

A personal guarantee holds a business owner personally responsible for the payments if their business defaults. This provides a nice security blanket if you encounter any problems with payment.

For more information about T&Cs and how they can limit aged debt please read this. 

Get a debt collection quote


Once an invoice exceeds terms you have two immediate concerns: collecting that payment and protecting your cash flow from the problems caused by the delay.

56. Spread your customer base as widely as possible

Having a wide customer base can mitigate the risk of over-reliance on a single customer for your income. It also allows you the freedom to say no if a customer demands unfair payment terms.

57. Keep on top of your sales ledger

Your sales ledger is one of your most important assets, providing essential information about the invoices owed and therefore offering incredible insight into your business’s performance.

58. Know exactly when every invoice will exceed terms

Knowing exactly when each invoice will exceed terms allows you to spot potential cash flow shortages and take the necessary steps to safeguard your business.

59. Identify proportion of invoices unpaid beyond agreed terms

By showing which invoices have and haven’t been paid, the sales ledger provides an instant overview of the success of your company’s credit management processes. Should a high proportion of invoices be unpaid beyond the agreed terms, it could be time to focus on how to improve this aspect of your business and consider new strategies to implement.

60. Update cash flow forecasts

Regularly update your cash flow forecasts with anything that could impact your cash flow including all late payments or price increases. This will help you spot cash flow shortages before they happen.

61. Implement plans for cash flow gaps

Should you anticipate a cash flow shortfall, it’s vital that you do something to protect your business from the potential dangers as soon as possible and not just bury your head in the sand.

62. Update technology

Research suggests that slow internal processes and a lack of automation are the real cause of late payments amongst customers, so consider whether there’s new software you could also invest in to save time at your end.

63. Consider credit insurance

Credit insurance protects a business’s cash flow from the repercussions of late payment and bad debts by safeguarding the business from non-payment through insolvency or protracted default.

64. Consider invoice finance

Invoice finance removes the cash flow gap between a sale and payment by releasing up to 90% of your sales ledger value just 24 hours after invoices are raised. Facilities can also incorporate a dedicated sales ledger management service too, helping with any potential shortfall in resource or expertise. Could it be right for your business?

65. Maintain a strong relationship with your bank

Because late payment often leads to cash flow challenges, it’s useful to be able to call upon your bank when your business is in need of short-term funding to fill the cash flow gap, and having a strong relationship with them can help this.

66. Negotiate with suppliers

If your cash flow forecast reveals an upcoming cash flow shortage as a result of late payment, you could request temporarily longer credit terms with your suppliers.

67. Incentivise sales teams only once cash has been collected

Incentivise your sales team only once cash has been collected. This ensures they trade with businesses who are good payers rather than simply chasing turnover.

68. Encourage early payment

Early settlement discounts provide an incentive for customers to pay promptly, ensuring you get paid within terms and reducing the cash flow gap between paying suppliers and receiving payment.

69. Regularly benchmark suppliers

To ensure you’re getting the most for your money, regularly benchmark your suppliers to ensure that you are getting the best service possible – whether that’s your accountancy software or debt collection partner.


70. Always know who you owe money to

It’s important to know exactly who you owe money to and when so that you don’t become the one being chased for late payment, as this often comes with additional interest and charges and exacerbates the challenges you already face with regards to getting paid yourself.

Take a look at these 10 commandments of cash flow management for more tips on improving your cash flow.


As soon as an invoice goes overdue it threatens your cash flow, so it’s vital to implement the right procedures in order to protect your business.

71. Be sceptical

Don’t take late payment excuses at face value. Often, such excuses merely act as delaying tactics. Have a procedure in place to deal with each common excuse and limit their delaying power.

72. Charge late payment interest

Under the Late Payment of Commercial Debts (Interest) Act, businesses are entitled to charge interest on debts that have exceeded credit terms. Get to know it and what you can legally charge here.

73. Take action

Despite the fact it’s rightly yours, asking businesses for money they owe you can be a daunting task. Never be afraid to take action.

74. Don’t hesitate

Once an invoice exceeds its credit terms, the pressure’s on as the likelihood of collecting the debt in full decreases as the debt grows older. It’s therefore vital to speak to your customer immediately to ascertain why you haven’t been paid, and when they expect you to be.

75. Stick to your late payment procedure

There’s no point having a procedure if you don’t stick to it. Following a structure that’s based on best practice and the company’s experiences can be hugely productive and deliver the best results.

76. Talk to the most relevant person

To ensure you get paid as quickly as possible make sure you are talking to the person responsible for paying you.

77. Pick up the phone

Whilst many people prefer corresponding through email or letters you can make much more of an impact over the phone. Plus it’s easier to spot when customers are giving you the runaround. 

78. Focus your attention on high-risk debts

If you have multiple aged debts it could be beneficial to prioritise the high-risk invoices. Focusing on the higher-value invoices that haven’t been paid could give you a quick cash flow boost.

79. Target older debts

Statistically, the longer an invoice goes unpaid the harder it is to collect the money. So, stop letting your unpaid invoices gather dust and start the action needed to get them paid.

80. Log all correspondence

Always keep a record of all letters, emails and phone calls, not only for your own reference but in case there is a dispute. This information could be useful evidence if you end up taking your customer to court.

81. Compile a stop list

Persistently poor payers should be put on a stop list and services withheld until payment has been received. Going forward you may want to take full or partial payment upfront.

82. Get rid of repeat offenders

Whilst ending a customer relationship is arguably a last resort, you should ask yourself what a customer is worth if they continuously pay late or not at all.

83. Don’t be bullied into accepting poor payment practices

Don’t let customers walk all over you or force you into accepting poor payment practices. You need to be strict with your payment terms to get the desired results.

84. Know your limits

It’s important to know when you have exhausted all of your efforts on chasing a payment or you will continue to waste your time on old invoices to the detriment of newer ones. Consider outsourcing tricky debts instead.

85. Follow through on warnings

Persistently late payers are never going to clean up their act if you keep letting them get away with it. Therefore it’s vital to follow through on your warnings.

86. Be persistent

If you apply strong credit control processes for a short period and then slacken off, you’ll lose many of the benefits. Be consistent in your efforts to achieve the best results.

87. Consider your relationship

You must learn to balance customer relationships with a firm credit management stance. You will have to be strict and review relationships regularly to identify your ‘valuable’ customers and those costing you more in management than their business is worth.


88. Report late paying customers

You can challenge a Prompt Payment Code signatory’s status or report a problem with getting paid to the Small Business Commissioner. This could encourage poor payers to clean up their act.

For more information on what to do when an invoice exceeds terms download this guide.

FREE DOWNLOAD: What to do when invoices exceed terms


Whether it’s because they don’t agree with your prices, there’s a mistake on the invoice or they claim the service wasn’t complete, the way a dispute is handled can impact the speed at which you get paid.

89. Ask for part payment

When a customer disputes an invoice, always ask the customer to pay the undisputed part before attempting to resolve the issue. This will indicate if it’s a valid excuse and ease the cash flow pressure caused by the delay.

90. Don’t be afraid to confront the issue

Don’t let the fear of upsetting a customer stop you from pushing for payment. It’s important to face the problem head on as the longer you wait, the harder it is to collect payment.

91. Speak to the right person

When a dispute is identified make sure you are talking to the person in charge of paying the invoice. Having the appropriate contact within the customer’s business on file will speed up this process.

92. Be prepared

Handling disputes is much easier if you have facts and evidence to hand. So, make sure you have a record of all correspondence, proofs of delivery and invoices so you can prove what you’re owed.

93. Remain professional

Unfortunately, the nature of disputes means that sometimes it can get ugly. But, regardless of your client’s behaviour, it’s important to always remain professional and mature.

94. Think ahead

Customers who repeatedly dispute invoices should be paid particular attention to. To protect yourself in the future ask for full or partial payment upfront from those you are suspicious of.


95. Feedback

If the dispute is genuine, ensure that constructive feedback is given to the department responsible for the dispute to ensure that other customers do not end up with same issues in the future.

For more tips on how to avoid disputes altogether take a look at this blog post.


It’s a good idea to ensure that the person responsible for your business’s credit management is constantly informed on best practices.

96. Improve skills

Taking part in regular training will ensure you keep up to date with new and innovative ways to maintain and improve credit management processes. This will boost your performance.

97. Hire a dedicated credit controller

Whilst not all businesses have the need to employ a dedicated credit controller in house, doing so ensures that the person responsible for the job is capable of the task and gets the right results.

98. Bring in the experts

When you’ve exhausted all your internal efforts use a debt collection agency to recover your outstanding debts. Often simply introducing a third party will encourage the customer to pay. Get an instant debt collection quote to discover how much we would charge for successfully recovering your unpaid invoices.

99. Consider outsourcing

Given how challenging and time-consuming the credit control process can be, it’s not surprising that some businesses are struggling to keep on top of it. By outsourcing your credit control function you could improve your cash flow and regain the time to focus on your business.

100. Read this guide to credit management

For a definitive guide to improving your credit control performance download this Essential Credit Management Handbook, which goes into more detail on how to improve your results.

101. Subscribe to our newsletters

Subscribe to Hilton-Baird Collection Services’ credit management blog to receive useful and informative articles, tips and guides like this to help your business improve its credit control.

If you need additional help with improving your credit management we could help. Contact us on 0800 9774848 or collections@hiltonbaird.co.uk to discuss your requirements.


Just some of our clients

  • Wupwoo
  • Construction Recruitment Services
  • PNC Business Credit
  • FRP Advisory
  • Leumi ABL
  • Santander Corporate & Commercial
  • Smith & Williamson
  • BNP Paribas
  • Barclays
  • Eazipay
  • Custom Glass
  • Harrisons Business Recovery
  • SER Contractor
  • Midland Rock
  • NatWest
  • Quantuma
  • Wote Street People
  • Leonard Curtis
  • Kroll
  • Close Brothers Invoice Finance
  • Mazars
  • Kreston Reeves

Authorised and Regulated by the Financial Conduct Authority