If your customers are other businesses, credit control and cashflow for UK businesses are not back-office admin; they are survival. When a major customer collapses or simply pays late, even a profitable firm can run out of cash. In sectors such as construction, retail and hospitality, insolvency is an ever-present risk. Company insolvencies in England and Wales hit their highest level since 2009 in 2023, and remained high in 2024, according to the Insolvency Service. When a large customer enters liquidation, your invoice joins a pool of debts to be prioritised by the insolvency practitioner. Secured creditors and employees usually come first; unsecured trade creditors often receive little or nothing.

Insolvency is the worst-case scenario, but late payments are far more common and can be just as deadly. The Federation of Small Businesses reports that late payments are one of the most common financial pressures facing small UK firms, with large sums tied up in unpaid invoices. Payment can arrive weeks beyond agreed terms, forcing owners to rely on overdrafts, delay their own supplier payments or turn down new work. For women founders and self-employed women, who may have less access to external finance, protecting cashflow is especially important. Getting paid on time is central to survival.

Credit control and cashflow basics for UK businesses

• Put a proper bookkeeping system in place so you always know who owes what. HMRC’s Making Tax Digital rules, explained in our checklist for self-employed women, set out the new requirements: most self-employed people and landlords with turnover above £50,000 must join MTD for Income Tax Self Assessment from April 2026, and those above £30,000 from April 2027. A cloud accounting package is now a sensible investment, not a luxury.
• If you incur significant out-of-pocket costs for materials, ask the client to pay for those up front or directly.
• Ask customers for a copy of their payment policy. If it is not reasonable, negotiate. Start with payment terms. For a large contract, suggest phased payments with an up-front initiation fee. In consultancy work, three phased payments is a common structure and most clients accept it.
• For a significant contract paid in arrears, ask for the information you need to assess credit risk: bank references, trade references and their latest filed accounts. Visit their premises and meet directors and finance staff if possible. You can also buy a credit report from a recognised agency.
• For small amounts, ask for cash with order or on delivery.
• Otherwise start with the shortest terms you can: 7 to 30 days. Industry standards and customer power can override this, and some buyers routinely pay 60 or 90 days late. In those cases, consider offering a small discount for prompt payment to move your invoice to the front of the queue.

Cash is king

Turnover is vanity. Profit is sanity. Cash is reality.

Poor cashflow remains one of the main causes of business failure. Many businesses that fail are profitable on paper; they simply run out of cash because customers have not paid. Firms with tight, fast credit control are the most likely to survive. For more practical ideas, see our guide to 5 Tips to Improve Cash Flow for UK Business Owners.

Send invoices immediately. Businesses of every size fall down on this simple rule, and freelancers and creative professionals can be the worst offenders. If you do not invoice straight away, you signal that you do not mind waiting, and you are further down the queue if the customer gets into difficulty. As soon as you deliver, invoice. Make it a habit.

Make your invoices easy to pay. Include a clear due date, your bank details, a purchase-order number if one was issued, and a breakdown of the work. Send them to the right person, the one who actually authorises payment, not just your day-to-day contact.

Getting the money in

If the payment date passes and you have still not been paid, here is what you can do:

• Start with written reminders. Keep communications professional and friendly. There may be a genuine reason for the delay, and you want to resolve it while keeping the customer.
• If there is still no payment, follow up with phone calls. Friendly persistence works. Some businesses call weekly, then daily, until they get an update.
• If the “cheque is in the post” but does not arrive, offer to collect it. Pay it into your bank promptly so it cannot be stopped. Better still, encourage bank transfers and avoid cheques altogether.
• If there is still no payment, get formal. A solicitor’s letter often prompts payment. Your accountant or solicitor can advise on next steps.
• Late payments cost you in bank charges, interest and lost opportunities. Under the Late Payment of Commercial Debts (Interest) Act 1998, you can charge business customers statutory interest at 8% plus the current Bank of England base rate, plus a fixed compensation sum of £40 to £100 per debt depending on the amount owed.
• The Office of the Small Business Commissioner can help resolve late-payment disputes and encourage fair payment practices. Larger customers may also be signed up to the government’s Prompt Payment Code.
• For smaller debts, a DIY option is to start a claim through the Money Claim Online service. Send the debtor a final letter saying that unless payment is received within seven days you will issue a claim, and they will be liable for the debt plus court fees and interest. Most pay. If they do not, filing the claim is straightforward, fees are scaled to the amount, and you do not need a solicitor.

Keep your cashflow under control

Nobody wants their business to be dominated by credit control. You would rather be producing, delivering, promoting and selling. Getting credit control and cashflow for UK businesses right is not glamorous, but it is what keeps the lights on. So get your processes sorted now and they will largely take care of themselves. Stay sloppy and credit control will eventually consume you. It is never too soon to get it in hand.

Action steps for this week:

1. Review your payment terms and make sure they are written into every quote, contract and invoice.
2. Check that your bookkeeping system can produce an aged debtor report at the click of a button.
3. Invoice within 24 hours of delivery from now on.
4. Diarise follow-ups for every overdue invoice and escalate formally after 30 days.
5. Know your rights under the Late Payment of Commercial Debts (Interest) Act 1998 and be ready to use them.