Yes, for prioritising which accounts to chase and drafting reminders. The rules and the phone call stay human. Is your DSO gap bigger than it should be? Free assessment, no commitment.

Credit Control: Process, KPIs and How to Automate It

Bramvia — Business Central Experts

Credit control is how a business makes sure customers pay on time: credit limits, terms, reminders and escalation. The process step by step, the KPIs (DSO, aged debt, bad debt ratio), a worked example, and how to automate reminders and blocks in your ERP.

Short answer: credit control is the process of deciding who you sell to on credit, on what terms, and making sure they pay on time. In the UK it's the standard name for the function; in the US it's usually called collections or accounts receivable management. It covers four stages: before the sale (credit checks and limits), at the sale (clear terms on the invoice), after the sale (reminders and escalation), and when it goes wrong (holds, collection, write-off). Good credit control is the cheapest source of cash a business has: every day you shorten payment is working capital you don't need to borrow.

Working demo: Collections and customer credit risk. Each customer is a 3D tower with debt by age and its credit limit. Send reminders by level, post payments, hold orders that exceed the risk and see the cash-in forecast based on how each customer pays, with the result in Business Central. Open the demo

The credit control process

Stage	What happens	What to set up
1. Credit assessment	Check the customer before extending credit	Credit check, trade references, a credit limit per customer
2. Terms	Agree payment terms up front	Terms on the contract and every invoice (e.g. 30 days)
3. Invoicing	Invoice promptly and correctly	Invoice the day of delivery; errors delay payment
4. Reminders	Chase before and after the due date	Friendly reminder before due; escalating reminders after
5. Escalation	Phone call, account hold, final notice	Automatic order block when overdue or over limit
6. Recovery	Collection agency, legal action, write-off	Clear policy on when each step happens

The biggest improvement in most companies is step 3: invoicing late or with errors is the most common reason customers pay late.

The KPIs that matter

DSO (days sales outstanding) = (Trade receivables ÷ Revenue for the period) × Days in period
DSO gap = DSO − Agreed payment terms
Cash tied up by the gap = (Revenue ÷ Days) × DSO gap
Overdue % = Overdue receivables ÷ Total receivables
Bad debt ratio = Written-off receivables ÷ Credit sales for the period

Worked example: a company with £18M revenue and £3.2M in receivables, on 30-day terms:

DSO           = 3.2 ÷ 18 × 365 = 65 days
DSO gap       = 65 − 30 = 35 days
Cash tied up  = (18,000,000 ÷ 365) × 35 = £1.73M

£1.73M of your cash is financing your customers. Cutting the gap by ten days frees £490,000 — without selling anything more.

The aged debt report

The core tool of credit control: receivables grouped by how overdue they are.

Bucket	Typical action
Not yet due	Nothing — or a courtesy reminder before due
1-30 days overdue	Reminder email
31-60 days	Second reminder, phone call
61-90 days	Account on hold, final notice
90+ days	Escalation to collection, provision for bad debt

Review it weekly. The customers at the top of the 31-60 column are where the cash is.

How to automate it

Most credit control work is repetitive and rule-based, which makes it ideal to automate in the ERP:

Credit limits per customer, with a warning or block when a new order exceeds it.
Reminder levels: automatic emails at set days overdue, each more firm, with the statement attached.
Finance charges on overdue balances where your terms allow.
Automatic order blocking when a customer is overdue beyond a threshold — and automatic unblocking when they pay.
Aged debt and DSO dashboards that update themselves.

Business Central does all five natively — credit limits, reminder terms with levels, finance charge memos, and blocking — so the credit controller spends time on the phone with the accounts that matter instead of assembling statements. For the forecasting side, see the 13-week cash flow forecast.

FAQ

What's a good DSO? It depends on your terms. The number to watch is the gap: DSO minus terms. Under 10 days is healthy; over 20 needs action.

Should we stop supplying late payers? An automatic block with a clear threshold works better than case-by-case decisions — it's consistent and removes the awkward conversation from sales.

Is credit control the same as accounts receivable? Accounts receivable is the ledger; credit control is the process of managing it.

Can AI help? Yes, for prioritising which accounts to chase and drafting reminders. The rules and the phone call stay human.

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Tell us your current system and how many users you have. First reply within one working day. / Cuéntanos tu sistema actual y cuántos usuarios sois. Respondemos en un día laborable.

Is your DSO gap bigger than it should be? Free assessment, no commitment.

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