Debtor days (Days Sales Outstanding) is the average number of days between raising an invoice and receiving payment. UK B2B SME benchmarks sit around 45-55 days. Bringing this down to 30-35 days is one of the highest-leverage cash flow improvements available — and it requires invoicing process discipline, not new tools.

For a business with £500K monthly revenue, dropping debtor days from 55 to 35 frees up roughly £330K of working capital. That''s often more than a year''s growth budget — and it''s available without raising a penny of debt or equity.

How to calculate debtor days

Debtor Days = (Accounts Receivable / Annual Revenue) × 365

For a business with £100,000 in outstanding invoices and £800,000 annual revenue: (£100,000 / £800,000) × 365 = 45.6 debtor days.

Most accounting software has this as a built-in metric. Check it monthly.

The 8 levers that move debtor days

1. Shorter terms (the obvious one)

Default UK B2B terms are 30 days. Many SMEs accept this without thinking. For new customers, set 14-day terms. For existing customers, renegotiate at the next renewal.

The hidden truth: when you have 30-day terms, the average actual payment is 45-55 days. When you have 14-day terms, the average actual payment is 25-30 days. The gap to actual payment is roughly the same, but the baseline moves.

2. Invoice immediately, not at month-end

Invoicing on day 1 of the month for work delivered through the previous month is the standard. But if a project completes on the 15th, that''s 15 days of free credit you''re giving by waiting until month-end.

Invoice on completion, not on a billing cycle. For monthly recurring work, invoice on the agreed cycle but invoice on day 1 of the cycle, not at month-end.

3. Get the invoice details right first time

The biggest cause of avoidable delays: invoices with errors or missing data the customer''s AP team needs.

Common asks the AP team will reject for: missing PO number, wrong VAT number, wrong banking details, name doesn''t match purchase order, line items don''t match contract.

Verify with the customer''s AP contact at the start of the engagement. Store the requirements.

4. Send invoices to the right person

The decision-maker isn''t the same as the AP contact. Sending the invoice to "the partner I work with" delays payment because they have to forward to AP, who might be in a different city.

Confirm at engagement start: "When we send invoices, who in your team is the correct contact?" Save that contact. Send invoices to them directly (cc the relationship contact, don''t make them the primary recipient).

5. Direct debit or card-on-file for recurring work

Eliminates the AP-team step entirely. The customer signs once, and every invoice is collected automatically. Use GoCardless, BryxoPay, or your bank''s service user number for Direct Debit. Saves typically 15-25 debtor days vs sending invoices and waiting.

6. Active chasing — not passive

A debtor sits in the bottom drawer of the AP team. Most invoices that go 60+ days do so because no one chased.

The chasing cadence that works:

• Day 7 after issue: polite "wanted to check this is in your queue" email (automated is fine).
• Day 21: "wanted to confirm payment date" email, cc''ing the relationship contact.
• Day 28: phone call from the account manager.
• Day 35: phone call escalation to a more senior contact.
• Day 45+: hold further work pending payment.

7. Make payment frictionless

Payment-on-card link in the invoice email. Open banking pay-now button. Direct bank details prominently in the invoice. The fewer clicks between "I want to pay this" and "it''s paid", the faster you get paid.

8. Track the metric and rank customers

Monthly: top 10 slowest payers, by days late. Have a tactic per customer for the next month. Don''t treat them all the same.

Some customers will always pay slowly because their internal processes are slow. Some will pay slowly because they''ve forgotten. Some will pay slowly because they''re in trouble. The right action varies.

When to consider invoice finance

Invoice finance (factoring, invoice discounting) turns receivables into cash within 24-48 hours, for a fee of typically 1-3% per invoice.

Useful when:

• You have a big payment cycle gap (e.g. lumpy project work).
• You need cash NOW for a specific reason (payroll, opportunity, tax bill).
• Your debtor book is concentrated and you need to smooth.

Not useful when:

• Your debtor days are 60+ across the board — you need to fix the process, not just bridge the gap.
• The fee eats your margin (low-margin businesses can''t absorb 2-3% off the top).

What to do this month

• Calculate your current debtor days. Compare against the 45-55 day benchmark.
• Identify your top 10 slowest payers. For each, decide: chase harder, change terms, move to Direct Debit, or accept and price for it.
• Set up automated chasing on day 7, 21, 28 in your accounting software (Xero, QuickBooks, FreeAgent all support it natively).
• For your next 5 new customers, change default terms from 30 to 14 days.