The 777 Rule – What on Earth is it?

Did you know that there are all sorts of tricks finance teams can use to help them manage cashflow and credit control on a daily basis? Everyone has their preferences, but one of the ones we see quite often is the 777 rule. This little credit control method is great for keeping on top of your invoices and making sure you follow up in a timely manner, and we wanted to share it with you today.

What is the 777 Rule?

The 777 rule is often used to quickly describe a 3-step process for collections.  ‘Make the first formal follow-up around 7 days after the due date, follow again 7 days later if there is no meaningful response, and review for escalation after a further 7 days.’ If you look abroad this may mean slightly different things, but in the UK it’s a good internal discipline for chasing overdue commercial payments in a measured and documented way.

How Does it Work?

The 777 rule works like this:

1. The day after the due date: Send a clear reminder to the client. You can do this by phone, but always follow it up in writing by email. During this, make sure you confirm the invoice number, the amount due, the due date, and how to pay. The tone of this communication should be professional and calm, and open to support.
2. Day 14: Send a follow-up. This should be slightly firmer, reminding them that the invoice is now overdue by 14 days. Ask whether there’s a problem or dispute, or an issue with the invoice. Make sure you get solid answers on when you can expect payment. You want clarity here, not more vague promises.
3. Day 21: At this point, you need to decide whether or not to escalate the issue further. If there’s been no payment or any credible engagement, you should move from routine credit control to a more formal debt collection strategy.

This is the point where most finance teams lose their momentum. They keep ‘checking in’ long after things should have been escalated, because it’s simpler than following the next steps. This is why we recommend you bring in a professional debt collection agency at this stage, so that you have the best chance of recovering money owed to you.

When Should it Start?

The 777 rule is ideal for internal finance teams to use as a ‘rule of thumb’ for credit control. It should kick in as soon as an invoice moves from current to overdue and there’s no sign of payment from the client.

It’s especially useful if:

• The debtor has been reliable in the past
• There’s no dispute around the debt
• The amount is commercially significant
• You want a consistent internal process

For SMEs, the simple steps in the 777 rule can make all the difference. After all, one or two overdue invoices can cause a huge number of knock-on issues, including negative impacts on payroll planning, delayed supplier payments, the timing of? submitting your VAT returns and even the working capital you have.

Does it Work?

This is the big question. Because it’s all very well having these rules and techniques for recovering overdue invoices, but if they don’t actually work, then it’s all moot. The good news is that yes, the 777 rule is an effective and practical way to approach B2B debt collections. It gives businesses a structure to follow and a consistent follow-up pattern, which is often all that’s needed to prompt action from late-paying clients.

However, it’s important to remember that this isn’t a formal, legal rule. It’s just a guideline, a structure to follow. The UK does have very real processes for escalating debt collection, especially if it ends up needing court action. Following the 777 rule does put you in good stead to do this, since you will have evidence of repeated attempts to recover the debt, so you can make a decision on where to go next. Think of the 777 rule as a credit-control framework, rather than a substitute for legal advice or a formal process.

Of course, if you reach that 21-day point, you need to make a decision about whether or not to escalate the case. In 99% of cases, we would recommend reaching out to a debt collection agency for support in moving to a more formal collections stage. At Debtcol, this is exactly what we do. We work with businesses of all shapes and sizes to implement processes to follow up on late payments, collect from debtors, and make sure that you have robust systems in place to prevent it in the future. If you’d like to know more, just get in touch with the team today, and we would be happy to help.