Your options when a debt becomes overdue

Once an invoice exceeds its credit terms, the likelihood of collecting the debt decreases as it grows older, which is why it’s worrying to see that 30% of businesses now classify more than 10% of their debtor book as over 90 days old.


Firstly, if you have a dedicated credit control team in house it can be tempting to continue chasing the customer yourself. This is beneficial because your team will already have a good understanding of your customers and will be able to maintain the relationships they have built. It also keeps you in control at all times so you will know what is happening and allow you to update your cash flow forecasts accordingly.

The downside is that chasing customers for overdue debts can be a time-consuming process that absorbs valuable time and resource – often at the expense of other, newer invoices. Our survey found that the average business spends 17 hours a week on credit control and almost a third of that time (31%) is spent chasing overdue debt.

Especially in small businesses with low staff numbers, the person in charge of credit control may have other responsibilities and tasks to achieve, meaning that sufficient time may not always be available.

Similarly, it’s not always viable to have someone dedicated to credit control in-house as employees are fixed costs and the business will need to account for overheads that go beyond basic salaries, which is why many businesses look at outsourcing instead.


If you feel you have exhausted all of your in-house efforts, another option is to outsource the debt. Specialist commercial debt collection agencies excel at the recovery of particularly outstanding invoices, dedicating the time and attention to each individual customer that you may no longer be able to afford.

According to our survey, 17% of businesses now outsource all or part of their credit control function – the highest number since the survey began in 2011. This could be because businesses are increasingly recognising the benefits of calling in assistance when it comes to getting paid.

The name of a commercial debt collection agency alone will add further weight to your collections process, often enabling the collections company to take a firmer stance whilst you retain your ‘good cop’ role, protecting customer relationships.

The cost of employing debt recovery experts can be offset against the risk of losing your money altogether, while most collection services are success-only, which means you don’t pay unless your money is recovered. It can also be balanced against the resource that would otherwise have to go into your own team’s credit control, which could then lead to other debts being neglected.

Also, prices vary depending on the value and age of the debt, so it often pays to get debt collection companies in early on to minimise costs and maximise your cash flow.

Outsourcing debts can be a daunting process and many business owners worry about losing control and trusting another company to protect their brand and customer relationships. The key is finding a debt collector that will respect your brand as much as you do. Also, by introducing a debt collection agency as part of your normal credit control process, you can ensure that the agency complements your in-house collection efforts while putting pressure on your debtors to help you get paid sooner.

Go legal

Whilst some customers will respond to the debt recovery techniques employed by your business or a commercial debt collection agency, others need an even firmer approach to persuade them to settle outstanding invoices. This is where legal proceedings can have the best impact.

Our survey found that 35% of businesses currently use the Small Claims Court and County Court Judgements (CCJs) as part of their credit management strategy.

However, due to the time-consuming and costly nature of going down the legal route, this is often considered as a last resort. And more often than not customer relationships will be damaged if this route is taken. But you must ask yourself if you want a customer that consistently fails to pay on time.