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Navigating Commercial Debt Collection: Tips and Best Practices
If you want to improve payment times, three habits matter: invoice accurately, chase consistently and escalate overdue accounts before they become difficult to recover. Late payment remains a significant problem for UK businesses. Evidence cited by Parliament indicates that around 44% of SME invoices are paid late, while late payments are estimated to cost the UK economy almost £11 billion each year and contribute to around 14,000 business closures annually.
Get the groundwork right before you raise the invoice
Credit control starts before the sale. A credit check on a UK or overseas company can help you assess factors such as company filings, registered charges and available credit information before offering substantial credit.
Clear watertight terms and conditions are equally important. Combine them with structured onboarding new clients with credit limits so customers understand when payment is due and what happens if an invoice becomes overdue.
Chase on a schedule, not on a feeling
A written credit-control sequence makes chasing more consistent. Your timetable might include a reminder shortly after the due date, a telephone call if payment remains outstanding and a formal demand if earlier contact produces no result.
Use aged debtor reporting that drives action to prioritise overdue accounts. Practical guidance on making successful debt collection calls and writing a debt collection letter can also help. Where internal resources are limited, outsourced credit control provides a structured alternative.
Know what you can add to a qualifying debt
Under the Late Payment of Commercial Debts (Interest) Act 1998, statutory interest on qualifying business-to-business debts is 8 percentage points above the applicable Bank of England reference rate. However, statutory interest cannot normally be claimed where the contract provides a different contractual interest rate.
Bank Rate was maintained at 3.75% on 30 July 2026. This means the statutory rate is currently 11.75% where the statutory regime applies. You may also be entitled to fixed compensation and reasonable recovery costs.
| Debt amount | Fixed compensation | Current statutory interest where applicable |
|---|---|---|
| Up to £999.99 | £40 | 11.75% a year |
| £1,000 to £9,999.99 | £70 | 11.75% a year |
| £10,000 or more | £100 | 11.75% a year |
Knowing when you can claim 8% statutory interest above base rate gives you another option when dealing with qualifying overdue invoices.
The Commercial Payments Bill, introduced in the House of Lords in May 2026, proposes major changes including maximum payment terms of 60 days with limited exemptions, mandatory statutory interest and stronger powers for the Small Business Commissioner. As of August 2026, it is still progressing through Parliament and its next stage is report stage in the House of Lords, so these proposed measures are not yet law.
Escalate when normal chasing stops working
Repeatedly broken payment promises, unanswered communications or an unresolved dispute may indicate that ordinary credit-control activity is no longer enough. Our guide on when to escalate an invoice explains the factors to consider.
Where there is a genuine disagreement, follow a step by step approach to disputed invoices. Specialist knowledge can also matter for construction debt collection and international debt collection.
Frequently asked questions
How long do you have to chase a commercial debt in the UK?
For ordinary contractual debts, the limitation period is generally six years in England and Wales. Northern Ireland also generally applies six years, although under separate legislation. In Scotland, many contractual debts are subject to a five-year prescriptive period. The calculation can be affected by the circumstances, including acknowledgements, payments and legal proceedings, so limitation should be checked before relying on a deadline.
How much do debt collection agencies charge?
Charges vary. Taurus Collections offers no win, no fee commercial recovery, with commission starting from 8% of money recovered.
Can you charge interest if your contract does not mention it?
Yes, statutory interest may apply automatically to qualifying business-to-business debts where the contract does not provide a different applicable interest rate.
Will using an agency damage the customer relationship?
It depends on the circumstances. Professional, proportionate communication can help keep the process focused on resolving the overdue account rather than allowing discussions to become personal.
Next steps
If overdue invoices remain unpaid despite your own chasing, speak to our commercial debt collection agency about the available recovery options.
Need Expert Debt Collection Advice?
If your business is dealing with overdue invoices or difficult debtors, speak to Taurus Collections for practical, professional support with commercial debt recovery.
Karl Baker
Karl Baker is the founder of Taurus Collections and his company has helped recover over £1.1 million worth of debt with an average recovery rate of 91.5%.