7 Expert Tips for Credit Control
One of the most frustrating aspects of business is that many customers will not pay their accounts or invoices without a reminder. The harsh truth is that over the course of the financial year, a minority will have the intent not to pay you anything at all.
Chasing debts can feel like a fruitless task given the hard work of actually attracting the custom in the first place has been complete. Then, following the supply of goods and/or services, it is natural to expect payment however as we all know that is not always the case.
An effective credit control system will ensure you maximise your company’s cash flow combined with a disciplined approach.
There are no short cuts to successful credit control, however there are certain steps you can put into practice to ensure you maximise your cash flow and get paid on time. The UK Debt Collection News Team has compiled what they think are the must have New Years resolutions for Credit Control.
- Expect late payment
It is a harsh reality of business that very few companies actually pay their outstanding accounts/debts on time. Assume that each invoice will be overdue as this prepares you for the reality.
- Send invoices asap
This sounds like a no brainer however there is no room for lethargy in this situation. The sooner you send your invoice for payment, the sooner you will get paid.
- Credit check and monitor
Just because your customer passed your credit checking procedure a few years ago does not mean they will pass it today.
- Make rules and stick to them
Set ground rules from the outset and make them very clear to your customer.
- Be authoritative
Some businesses are reluctant to ask for payments that are overdue as they fear losing the customer. How many suppliers have you stopped using because they wanted to have their invoice paid on time? A polite but firm approach when requesting payment is sensible.
- Pro active payment reminders
A pragmatic credit controller will not wait for an invoice to become overdue before phoning the customer. They will call a couple of days before.
- Will not pay whatever we do
Whatever you do, do not ‘write off’ a debt unless it is literally pennies. There should always be a recourse for non paying customers such as instructing a Debt Collection Agency, most of these will operate on “no win, no fee” such as PCS Credit Management.