Description: If you run a plumbing or heating business and you’re still chasing invoices without a proper system, this guide is for you. Learn what a credit control policy is, what it should include, and how to build one that actually gets you paid.
Let me paint you a picture. You’ve just finished a two-day boiler installation. The job went well, the customer was happy, and you invoiced them the same afternoon. Seven days later — nothing. You send a reminder. Still nothing. Two weeks in, you’re on the phone chasing payment while simultaneously trying to price up a new job, order parts, and manage your team. Sound familiar?
Late payment is one of the biggest frustrations in the plumbing and heating trade. And the frustrating thing is, most of it is completely avoidable. Not because your customers are bad people — most of them aren’t — but because without a clear, consistent process in place, invoices get forgotten, payment gets deprioritised, and before you know it you’re carrying weeks of unpaid work on your books.
That’s where a credit control policy comes in.
What is a credit control policy?
A credit control policy is simply a written set of rules that governs how your business handles invoicing, payment terms, chasing, and escalation. It answers the questions: when do we invoice, when do we chase, how do we chase, and what happens if someone doesn’t pay?
Most plumbing and heating businesses don’t have one. They rely on the owner’s judgement, a bit of WhatsApp chasing here and there, and hoping for the best. The problem with that approach is that it’s inconsistent, it’s time-consuming, and it leaves too much money sitting in the wrong bank account — the customer’s.
A proper policy changes that. It gives you and your team a clear process to follow, it sets expectations with customers upfront, and it means that every overdue invoice gets the same professional, timely response regardless of who’s dealing with it.
Why this matters more in the plumbing and heating trade
In my eyes, cash flow is the number one issue I see when I look at the finances of plumbing and heating businesses. Not turnover. Not profit margins. Cash flow.
You’re often buying materials upfront, paying your engineers on a fixed wage or via CIS, and then waiting for payment from customers before the money comes back in. If a handful of invoices are sitting unpaid at any one time, that gap between money going out and money coming in can cause real problems — especially if you’re growing, taking on new work, or trying to build up reserves.
A credit control policy tightens that gap. It gets invoices out faster, gets payment in quicker, and gives you a clear process for dealing with the ones that don’t pay.
The difference between domestic and commercial customers
Before you design your policy, it’s worth being clear about who your customers are — because the rules are different depending on whether you’re working for private homeowners or commercial clients.
For commercial customers (businesses, landlords, property management companies), UK law gives you automatic rights under the Late Payment of Commercial Debts (Interest) Act 1998. This means that if a business is late paying you, you can charge statutory interest at 8% above the Bank of England base rate, plus a fixed compensation charge of between £40 and £100 per invoice depending on the value. You don’t even need a clause in your contract — this is the legal default for business-to-business transactions.
For domestic customers (private homeowners), it works differently. You can’t automatically apply statutory interest. If you want to charge late payment fees to private customers, you need to have stated that clearly in your quote or booking confirmation before the work started. This is why your quote template matters — if it doesn’t include your payment terms and late payment clause, you lose that option later on.
The practical takeaway: make sure your quote or job confirmation document includes your payment terms, your due date, and — if you want to be able to charge interest — a clear statement that late payments will incur a fee. It takes five minutes to add and it protects you significantly.
What your credit control policy should include
A solid policy for a plumbing and heating business doesn’t need to be complicated. It needs to cover five things.
1. Payment terms
Decide how long customers have to pay. For domestic customers, 7 days from invoice is the norm in the trade — you’ve done the work, there’s no reason they should have 30 days. For commercial contracts, 30 days is standard, though you can negotiate this based on the relationship and the value of the work.
Whatever you decide, be consistent. State your payment terms on every quote, every order confirmation, and every invoice. Don’t leave it to chance.
2. Invoicing discipline
Invoice the same day the job is complete. Not the following Friday. Not at the end of the month. The same day. Every day that passes between completing work and sending an invoice is a day you’ve delayed the clock on getting paid. There’s no good reason to batch invoices unless your accountant has specifically asked you to — and even then, it’s worth questioning.
Make sure every invoice includes the job address, a clear description of the work, the total amount due (including VAT if applicable), your payment details, and the due date written out in full — not just “payment terms: 7 days” but the actual date.
3. A proactive chase sequence
This is the part most businesses skip. Research from UK debt recovery specialists consistently shows that businesses who contact customers before the invoice is even overdue collect payment significantly faster than those who wait. A brief midpoint check-in to confirm the invoice was received and there are no issues removes the two most common excuses for non-payment: “I never got it” and “there was a problem with the job.”
For domestic customers on 7-day terms, a well-structured chase sequence looks like this:
- Day 0 — Invoice sent same day work is complete
- Day 5 — Friendly reminder, two days before the due date (email or text)
- Day 7 — Brief nudge on the due date itself (email or text)
- Day 9 — Phone call, two days overdue
- Day 14 — Firmer written chaser, one week overdue (email or letter)
- Day 21 — Statement of account sent alongside final written notice, two weeks overdue
- Day 28+ — Referral to debt collection or County Court if required
Statements are worth including from around the three-week mark, particularly if a customer has multiple invoices with you. A statement of account shows everything outstanding in one place — invoice numbers, dates, amounts, and the total owed. It removes any ambiguity and makes it harder for a customer to claim they weren’t aware of the full picture. It also adds a layer of formality that signals this is being taken seriously.
For commercial customers on 30-day terms, the timeline can be scaled accordingly, with proactive calls at day 14 and day 28, escalation beginning around day 37 to 43, and a statement sent at the same time as your formal written notice.
A quick note on 30 EOM terms, which you’ll sometimes see in commercial contracts — particularly with larger property management companies or maintenance contractors. EOM stands for End of Month. So 30 EOM means payment is due 30 days after the end of the month in which the invoice was raised, not 30 days from the invoice date. In practice, this can mean waiting significantly longer than you might expect. For example, if you invoice on the 2nd of March, under 30 EOM terms the payment isn’t due until the 30th of April — almost two months later. If you’re working with commercial clients who request these terms, make sure you factor that into your cash flow planning. And if you can negotiate standard 30-day terms instead, it’s worth trying.
The key point is this: you need a sequence, and you need to follow it consistently. Every time. Not just when you feel like it.
4. Escalation rules
Decide in advance what happens if a customer doesn’t respond to your final notice. Are you referring to a debt collection agency? Are you using a solicitor? Are you going through the small claims court? These aren’t decisions you want to be making in the heat of the moment for each individual case. Agree the threshold upfront — for example, any invoice over £500 that remains unpaid after day 28 goes to a debt collection agency — and stick to it.
The warning that further action will be taken is often what gets people to pay. But it only works if customers believe you’ll follow through. And they’ll only believe that if you actually do.
5. Late payment interest
For commercial clients, you have the legal right to apply statutory interest automatically once an invoice is overdue. Most businesses don’t use this — but even flagging it in your written chaser at day 37 is often enough to prompt payment. The knowledge that the debt is growing tends to focus minds.
For domestic clients, include a late payment clause in your quote template so that you have the contractual right to apply a fee if needed. A common approach is a fixed admin charge plus interest at a stated rate. Keep it reasonable and proportionate — the goal is to get paid, not to create a dispute.
Here is an example of the kind of wording you could include on your quote or booking confirmation:
“Payment is due within 7 days of the invoice date. In the event that payment is not received by the due date, [Your Business Name] reserves the right to apply a late payment charge of £40 plus interest at a rate of 8% per annum above the Bank of England base rate, calculated from the due date until the date payment is received in full. By accepting this quote, you confirm that you have read and agreed to these payment terms.”
That wording is clear, it’s fair, and it gives you a contractual basis to act on if a domestic customer pushes back. You don’t have to apply the charge every time — and for good customers, you may never need to. But having it in writing means the option is there if you need it.
Getting the balance right — firm policy, loyal customers
One of the biggest reasons plumbing and heating business owners resist putting a credit control policy in place is the worry that it will damage relationships with good customers. And it’s a fair concern. The last thing you want is for a customer you’ve been servicing for ten years to feel like they’re being treated like a number.
But here’s the thing — a good policy doesn’t have to feel cold. The way it’s written, the tone it uses, and how it’s communicated all play a huge part in how it lands.
The early stages of your chase sequence should always be warm and professional. A reminder two days before the due date isn’t chasing — it’s good service. Most customers appreciate a nudge, and many will simply pay immediately. You’re not assuming they’re a bad debtor, you’re just keeping things tidy. Frame it that way internally and it will come across that way externally too.
Where the tone shifts is when a payment genuinely goes overdue and contact goes quiet. At that point, firmness isn’t unfair — it’s necessary. A good customer who genuinely forgot to pay will understand a professional follow-up. The ones who push back against a reasonable, clearly communicated process are usually the ones who were going to be difficult regardless.
Consider this: a loyal customer who always pays is never going to be negatively affected by your credit control policy. They’ll pay, the process moves on, and they won’t even notice it exists. The policy only becomes visible to people who don’t pay — and those are the people it’s designed for.
You can also build in a degree of flexibility at management level. For example, your policy might say that escalation to a debt collection agency happens at day 28 — but a director can choose to hold that for a valued long-term commercial client if there’s a genuine reason and an agreed payment date in place. Flexibility doesn’t mean inconsistency. It means having a clear default with the option to apply judgement when the situation genuinely warrants it.
The businesses that get this right are the ones who treat credit control as a normal, professional part of doing business — not a confrontation. The plumber who sends a friendly payment reminder is no different to the dentist who sends an appointment reminder or the accountant who sends a deadline reminder. It’s just good housekeeping.
The common mistakes plumbing and heating businesses make
Consider this a checklist of what not to do.
Sending invoices late. Every day you delay an invoice is a day you delay payment. Get the invoice out the same day.
Not having payment terms on the quote. If the customer hasn’t agreed to your terms before the work starts, you have very little leverage afterwards.
Being too soft too quickly. There’s nothing wrong with being friendly and professional in your early chasers. But by day 14, the tone should be firm. By day 21, it should be clear that action is coming. Too many businesses stay “friendly” long past the point where that’s appropriate, and it signals that the debt isn’t really a priority.
Not following through on threats. If you say you’re going to refer to a debt collector and you don’t, you’ve told the customer they can ignore you. Follow through, every time.
Treating every case the same. Your policy sets the default. But a long-term commercial client who’s a week late might just need a quick phone call. A domestic customer who’s gone quiet after three chasers is a different situation. Use the policy as your framework and apply judgement on top of it.
What good credit control looks like in practice
Let me imagine a scenario. An engineer completes a boiler service and replacement programmer at a domestic property on a Monday afternoon. Before he leaves site, he logs the job as complete in the system. By the time he’s driving to his next job, the invoice has gone out automatically — due date stated as the following Monday.
On Saturday, the homeowner gets a friendly text reminder. Monday comes and goes without payment. On Wednesday, a polite but clear phone call is made. The homeowner apologises, says they forgot, and pays that afternoon.
That’s it. No awkward conversation three weeks down the line. No chasing whilst trying to run a business. No unpaid invoices sitting on the books. Just a clean, consistent process that runs without anyone having to think about it.
That’s what a credit control policy delivers.
How software can make this effortless
Once you’ve got your policy in place, the next step is making sure it runs automatically — or as close to automatically as possible.
This is where things get really interesting for plumbing and heating businesses. At Together We Count, we work with our clients to build a credit control process that integrates directly with Xero. Because Xero is where your invoices live, it becomes the engine behind the whole system. Every time an invoice is raised, updated, or marked as paid in Xero, your credit control dashboard reflects it in real time.
What that means in practice is that whoever handles your credit control — whether that’s you, your office manager, or a dedicated team member — can log in each morning and see exactly who needs chasing that day, what stage they’re at in the chase sequence, and what action needs to be taken. No spreadsheets. No sticky notes. No relying on memory. Just a clear daily action list, driven by the policy you’ve agreed, updated automatically through Xero.
The policy drives the software. The software drives the actions. And the actions get you paid.
Ready to get your credit control sorted?
If you’ve read this far, you already know that a credit control policy would make a difference to your business. The question is how to build one that’s right for your specific situation — your payment terms, your customer mix, your team, and the way you like to work.
If you want to go deeper on building systems and processes in your plumbing and heating business — not just for credit control, but across the whole operation — my book The Systems Handbook was written specifically for business owners in the trade. It covers how to take the knowledge and processes that live in your head and turn them into something your team can follow consistently, so the business runs properly whether you’re on site or not. A credit control policy is a perfect example of exactly the kind of system the book helps you build. You can find it on Amazon.
That’s exactly what we help plumbing and heating businesses do at Together We Count. We’ll work with you to design a credit control policy that fits your business, and then we’ll build out the supporting software so that the policy runs almost on autopilot — connected to your Xero account, updated in real time, and giving whoever needs chasing a clear daily action list every single morning.
If you’d like to explore what that could look like for your business, get in touch with the team at Together We Count. We’d love to help.
Together We Count is an accounting firm specialising exclusively in plumbing and heating businesses across the UK. We work with sole traders, limited companies, and everything in between — helping you get on top of your numbers so you can focus on running your business.