Debtor days measure how long, on average, customers take to pay you. High debtor days mean revenue is on the books while cash is still out there. That is how a profitable month still feels tight.
This guide is general information for UK small businesses. It is not a credit policy for your firm, and it is not legal advice on debt recovery. Use it with your accountant when you set terms and chase rules.
Cashwatch™ ages every debtor, forecasts thirteen weeks out, and drafts chase emails: polite first, firmer after. You approve what gets sent. Pair this guide with how to chase unpaid invoices.
What debtor days mean
A common simple version is:
Debtor days ≈ (trade debtors ÷ credit sales) × number of days in the period
If customers take 45 days on average and your terms are 14 or 30, cash is lagging the work you already did. Compare your figure to your own terms first, not to a generic industry average from the internet.
Why the number rises
- Slow invoicing: the clock starts late if the invoice goes out a week after the job.
- Vague terms: "net whenever" invites delay. Put due dates on every invoice.
- No weekly chase habit: aged lists that only get opened at month-end grow quietly.
- Disputes left open: a query that sits unanswered freezes payment.
- Hopeful forecasting: treating 90-day balances as next week's cash.
How to reduce debtor days without burning relationships
1. Invoice faster and cleaner
Send the invoice the day the work is accepted or the goods ship. Include purchase order, job reference, amount, due date and how to pay. Errors are the most polite excuse for delay.
2. Set terms you will actually enforce
Pick terms that match your cash cycle (for example 14 or 30 days). Put them on quotes and invoices. For new customers, consider a deposit or stage payments on larger jobs.
3. Work an aged list every week
Sort by size and age. Current, 30+, 60+, 90+. Start with the balances that would hurt if they slipped another month. See the stepped wording in how to chase unpaid invoices.
4. Make it easy to pay
Bank details, payment link, or card option where it fits. Confirm the right accounts-payable contact. A chase to the wrong inbox adds days for free.
5. Stop counting dead cash as live cash
If a balance is disputed or unlikely, take it out of your "expected next week" receipts. Talk to your accountant about provisioning. Your 13-week trough should not assume miracles.
A simple weekly rhythm
- Export aged debtors from your books.
- Mark anything with a promise date this week.
- Send the next chase step (or call) on the largest overdue balances.
- Update your 13-week cash view with what is realistically collectable.
- Note one process fix (faster invoicing, clearer terms, better contact names).
How this ties to cash and year-end
Lower debtor days usually mean a higher trough in your short-range cash view. See when will my business run out of cash and 13-week cash flow forecasting explained. At year-end, aged debtors also feed your accounts pack: UK year-end accounts checklist.
Quick debtor-days checklist
Know your current debtor days and your standard payment terms.
Invoice the same day the work is done or accepted.
Put a due date on every invoice and make payment easy.
Chase from an aged list weekly, not only when cash feels tight.
Keep disputes moving so they do not freeze payment.
Do not forecast dead debt as next week's cash.
What to read next
This page is general information. Nothing here is legal advice on debt recovery for your specific case. Illustrative product behaviour is not a forecast of your debtor book.