Business Glossary
How to Improve Debtor Days UK
Improving debtor days is one of the fastest ways to release working capital. Every day reduced on a £500k revenue business frees approximately £1,370 in cash. Most UK SMEs can reduce debtor days by 10–15 days within 90 days using systematic credit control.
The Formula
Cash Released = (Current Debtor Days − Target Debtor Days) × (Annual Revenue ÷ 365)
Worked Example — UK SME
A UK business: £520k revenue, 58 debtor days, target 35. Cash release = (58 − 35) × £1,425 = £32,775 released from existing invoices with no new sales required.
UK Benchmark
📊 Three interventions that reliably reduce UK debtor days: (1) invoice immediately on delivery; (2) reminder email 3 days before due date; (3) phone call on the due date if unpaid. All three together typically achieve a 10–20 day improvement within 60 days.
Common Questions
What is the best way to chase invoices without damaging relationships?
Be professional, firm, and timely. By day 14 overdue, a polite call is entirely appropriate. Relationship damage comes from erratic chasing, not consistent professional credit control.
Should I charge late payment interest?
UK law entitles businesses to charge 8% above Bank of England base rate on late B2B invoices. Even mentioning it professionally can accelerate payment without needing to actually charge it.
When should I use a debt collection agency?
For invoices over 90 days with no credible payment arrangement. Most agencies charge 15–25% on contingency — almost always preferable to writing off the debt at 100% loss.
Related terms