In a competitive economy, it’s important to make your finances a core priority of your overall operations, but knowing the correct credit control approaches for new businesses can be a challenge all of its own.
Bigger companies can simply hire a credit controller and an entire finance team if necessary, but as a new business you probably don’t have that luxury from day one.
So what credit control approaches for new businesses can fill that gap – and which methods might prove to be a long-term solution right from the outset?
An individual approach
One of the most important credit control approaches for new businesses is not to try and use a one-for-all policy – different customers pose different credit risks, so you should set their individual account limits and payment terms accordingly.
Background credit checks can help you to find out more about each customer, or if your business is very simple, it might be OK at first just to have different terms for business and consumer clients.
The important thing is to understand your own business as well as your customer base, and take your lead from that understanding when setting your policies.
Outsourced credit control
An alternative is outsourced credit control, where you hand over some of the admin work and decision making to a third party.
This is an excellent option for new businesses, as it gives you access to a scalable finance team that should always meet your needs, and has access to tools for background credit checks and so on that you might not immediately have access to yourself.
It will also usually put a debt recovery team on standby should you ever need them to protect your cash flow, while relieving the admin burden on you so you can spend more of your time on building your new business.