We often talk about debt recovery as a last-ditch attempt to get back what you are owed, and generally speaking it’s better to avoid court action if you can.
And we often say prevention is better than cure, too – so for example when you are invoicing, you should double check that all the details are correct, and follow up with a phone call to make sure the invoice is received.
But just how early in the process does effective credit control begin? You might think it’s from the moment you take on a new client, but you’d be wrong.
When you agree to work with a new customer, it might already be too late; you give them a line of credit, they start running up a bill, but do you really know if they can afford to pay you, or whether they’ll even be bothered to try?
Really good credit control is always on the ball, from the moment an initial application comes into your company, and before you’ve agreed to supply a company or individual.
Carrying out background credit checks gives you an early heads-up on whether a client can be trusted to pay – even before they are your client.
But it can achieve more than just that, for example allowing you to set different credit limits for different customers, and therefore manage your risk proactively without simply turning down applications.
It’s also sensible from the outset to check whether the customer has any payment terms of their own, so that you can make sure your own Ts & Cs are the enforceable ones, or strike a compromise between the two.
And you can check all the details about who and where to invoice, meaning there’s less chance for the customer to claim your invoice has gone missing when deadline day arrives.
It’s all just the first step in an ongoing credit control commitment that should influence all of your dealings with any given customer – but from these first steps you can substantially reduce your exposure to risk, and hopefully avoid the need for debt recovery action completely.
Call 0808 149 9167 to talk to a member of our team.