Credit control

Credit control starts before the first invoice and ends when the money reaches your account. In the US the same work usually goes by credit and collections, and in the UK credit control is often also the name of the team that does it. Most of it is prevention, because checks, limits and clear invoices decide how much chasing you need later.

What credit control covers

• Credit checks. Before you open an account, review the customer's filed accounts on Companies House and a credit reference report. For large companies, the government's payment practices reports show how long they take on average to pay suppliers.
• Credit limits. The most a customer may owe you at any time, based on expected monthly orders and your terms and capped by what the credit check supports.
• Payment terms. Agreed in writing before the first order and shown on every invoice.
• Invoicing. Accurate invoices sent promptly, with the purchase order number and the contact who approves payment.
• Chasing. Reminders before and after the due date, a monthly statement of account and calls for large or older balances.
• Escalation. A final demand, putting the account on stop, then a debt collection agency, a solicitor or a county court claim.

What a credit controller does day to day

A credit controller's day usually starts with the aged debtors report, sorted by amount and days overdue. The rest of the day goes on tasks like these.

• Sending reminders and statements, and calling customers with large or late balances.
• Logging promises to pay, disputes and new contacts against each account.
• Chasing colleagues for proof of delivery or credit notes so disputes get closed.
• Allocating customer payments to the right invoices.
• Reviewing new accounts and requests for higher limits.
• Putting accounts on stop and releasing them once paid.
• Reporting debtor days and overdue balances at month end.

What to put in a credit control policy

A written policy makes sure finance and sales give customers the same answers. A short one covers these points.

1. Who sets credit limits and who approves exceptions.
2. Checks for new accounts and how often existing ones are reviewed.
3. Standard payment terms and invoicing rules.
4. A chasing timeline, for example a reminder 5 days before the due date, another the day after, a call at 14 days, a final demand at 30 days and stop at 45 days.
5. How disputes are logged and who resolves them.
6. When you charge statutory interest and compensation.
7. When debts pass to an agency or solicitor, and who approves write-offs.

How to measure credit control

Debtor days equals trade debtors divided by credit sales for the year, times 365. The overdue percentage equals debt past its due date divided by total trade debtors, times 100.

Example. With trade debtors of £240,000 and annual credit sales of £1,825,000, debtor days are 240,000 ÷ 1,825,000 × 365 = 48 days. If £60,000 of that is past due, the overdue percentage is 60,000 ÷ 240,000 × 100 = 25%. On 30-day terms, customers are taking about 18 days longer than agreed, on average.

Late payment rights in the UK

The Late Payment of Commercial Debts (Interest) Act 1998 applies when one business pays another late for goods or services. Its main rules are below.

• Statutory interest at 8% a year above the Bank of England base rate on 31 December (for interest starting January to June) or 30 June (July to December). Bank Rate was 3.75% on 31 December 2025 and 30 June 2026, so the rate for 2026 is 11.75%. You cannot claim it if your contract sets a different interest rate.
• Fixed compensation of £40 for debts under £1,000, £70 for £1,000 to £9,999.99 and £100 for £10,000 or more, once per late payment, plus reasonable recovery costs above that (GOV.UK guidance).
• Default terms. With no agreed date, payment is late 30 days after the customer gets the invoice or you deliver, whichever is later. Agreed terms can run to 60 days, or longer only if not grossly unfair to the supplier, and public authorities must usually pay within 30 days.

Example. A £12,000 invoice due on 1 August 2026 is paid 45 days late. Interest is £12,000 × 11.75% ÷ 365 × 45 = £173.84, and with the £100 fixed sum you can claim £273.84 on top of the invoice. GOV.UK advises sending a new invoice for it.

The Commercial Payments Bill, introduced in May 2026, would cap most payment terms at 60 days and make statutory interest mandatory. It had not become law by October 2026, so the rules above still apply.

Sunbay runs the chasing part of credit control from your ERP or accounting system. It sends email and SMS reminders on your policy's timeline, makes AI voice calls, issues interest notes and demand letters, keeps every reply and promise to pay next to the invoice and stops the sequence once the payment appears in your ledger. See Sunbay collections.

Frequently asked questions

What does a credit controller do?

A credit controller makes sure customers pay on time. The job covers checking new customers, setting limits, sending reminders and statements, calling about overdue invoices, resolving disputes and escalating debts that stay unpaid.

Is credit control the same as debt collection?

No. Credit control is the whole cycle from credit check to payment, run by your own team while you keep trading with the customer. Debt collection usually starts once a debt is seriously overdue, often through an agency or a solicitor.

Can I charge interest on late payments in the UK?

Yes, when the customer is a business. You can claim statutory interest of 8% above the base rate (11.75% a year for 2026) plus a fixed sum of £40, £70 or £100, unless your contract sets a different interest rate.