A credit controller is a person or external company whose role is to manage the employer’s creditors. Simply put, credit controllers chase customers for payment, perform credit checks on prospective customers in order to see whether there will be any risk involved in dealing with them and, on occasion, prepare paperwork for court hearings.

Many UK companies offer credit terms to their customers (some offer 30 days, some 60, some 90 etc). This can be beneficial to both the company and the customer as paying on credit helps the customer’s cashflow and enables them to buy more. The longer the company goes without getting paid, however, the worse this relationship becomes as the company itself can suffer from cashflow problems, it can spend unnecessary monies on debt collection and it can run the risk that the customer can go into liquidation before the company can get its money. Set against this background, a credit controller:

• Keeps in regular contact with debtors to ensure that they will pay on time or arrange a schedule for payment
• Keeps records of contact made with debtors to help businesses identify risky debtors and to provide an audit trail for any legal action that might be necessary down the line
• Credit checks new customers to ensure that they are not payment terms that they can meet
• Identifies customers that a business might not want to have or might want to give restrictive payment terms to
• Resolves problems of missing paperwork for clients so that they can pay promptly
• Instructs debt collection firms or solicitors if payments are significantly overdue
• Deals with liquidators
• Works with and reconciles debts and the aged debt register
• Creates or improves a credit control process for the company that enables the company to identify why customers get into debt, what can be done to reduce problems and how it can be done systematically to save the company time & money
• Reports to management enabling management to take swift decisions on problem customers before those customers go into liquidation

Many companies have an in-house credit controller that works exclusively for the company. The Cash Protection Agency offers an outsources credit control service to companies that has proved extremely popular for small and medium-sized businesses. Rather than incurring the costs of a member of staff and associated training costs, companies send their aged debtors list to the Cash Protection Agency whose expert staff contact the people and businesses that owe the customer money in a way that ensures that outstanding debts are minimised and the relationship for the customer is maintained for the future.

Many small businesses struggle to get money in. Many businesspeople worry that conversations about money will affect customer relations and they feel that they are not the right people to recruit and train a credit controller as it is something that they find difficult. In these instances, an outsourced credit controller, in the manner that the Cash Protection Agency offers, gives the company peace of mind, saves them money and improves their cashflow.

If you would like to know more about what a credit controller does or if you would like to make use of outsourced credit control, please give us a call on 0800 433 4113.

If you have any comments or further questions, please leave them below and we’ll be happy to answer them for you.

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Credit transactions are regarded as transactions done in good faith.  From the time credit is granted to the debtor, he has every intention of meeting that obligation.  However, the business of lending money is risky.  Sometimes, account receivables are declared as bad debts because they have become uncollectible.  Learning to handle debtors effectively can increase the chances of a full payment.

Handling Objections and Excuses of Debtors

Debtors are more likely to invent all types of excuses to avoid payment.  The same goes for people who have made a career out of borrowing money.  When attempting to collect and ask payment for a past-due account, an objection will always come up.  Look at this type of situation as an opportunity and not an obstacle.  Objections from debtors can become opportunities.  When a debtor uses an excuse, the creditor can always counter that excuse by offering a payment solution to the debtor.

Most of the problems in collecting started from an objection.  Objections are stated reasons or excuses for not paying what is owed.  These objections may be personal misconceptions, other priorities and other factors used by debtors.  Objections are different from conditions.  A condition is a real and tangible reason.  For example, a debtor cannot pay because he is on the verge of bankruptcy.  A certain company may not be able to pay debts because of a foreclosure or merger.

If the debtor presents his personal financial condition as the reason that he cannot pay his obligations, further investigation should be done to verify the information.  The credit bureau is a good place to start since a creditor can get information regarding the debtor’s current financial transactions.  Verifying information provided by the debtor is important in planning the next course of action.  If the debtor is telling the truth about his dwindling finances, the creditor can ask for a meeting again and try to work out some form of payment arrangement.

Handling Professional Debtors

Professional debtors are people who go around borrowing money from different creditors.  They are called professionals because they have become experts in what they do best: non-payment of debts.  Professional debtors are smooth operators who can talk their way with creditors.  A thorough credit and background investigation should always be done as part of standard procedure.  Collection payments should also have a certain process for all debtors to follow.  Specific date and time of payment must be indicated in the terms and conditions.  If the debtor signs the document, this means he or she has understood and accepted the obligation to pay within specified terms.

Keeping payment terms and collection procedures specific, and thorough background checks are sure-fire ways of deterring fraudulent debtors.  Creditors should be prompt in collecting due accounts since any delay may cause the debtor to think about non-payment.  Making a firm stand on collection and payment procedures will encourage debtors to remember to pay their debts.  Professional debtors may want to stay away from tough creditors.

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Overdue accounts can be challenging to collect especially if the debtor is deliberately avoiding all your attempts of communication.  If the debtor does not pay within a reasonable amount of time, you can start thinking about writing it off as a bad debt or hiring a collection agency to do the collecting for you.  You already lost a lot of time trying to track the debtor on your own.  Months may have passed and still no money returned.  You may have wasted your time when you notice that the expense you incurred is almost the same as the amount owed to you.

Establish a Good Collection System

To avoid wasting any more of your precious time than you already have, it is time to move on and forget about the experience.  The best thing that you can do now is to establish a good collection system.  Having an efficient collection system should be treated as a process.  Collection is not just about writing a single letter without communication beforehand.  It is better to let your customers know your terms and conditions before allowing them credit.

Plan a Series of Steps

In designing your collection system, you will need to plan a series of steps to ensure a higher rate of return on all your accounts. Do not allow an account to exceed 60 days past-due.  If an account is nearing its due date, you can send a friendly reminder to the debtor.  This can be done through telephone, e-mail or a formal letter.  A past-due statement can be sent to the debtor when there is no response after your attempt to remind.  If the statement of account did not work, scheduled phone calls can be made.  Calling at the right time is the key if you wish to speak to the debtor.

Make an Effective Final Demand Letter

After making phone calls and still no response from the debtor, you can start drafting a final demand letter.  Set a time limit or a final deadline that you expect the debtor to pay.  Indicate the exact date and time of your time limit.  In the final letter, you should firmly state that you will seek legal action if the debtor will not pay on the specified date.

Consider a Payment Arrangement

If the debtor responds and offers to pay in instalments because of financial difficulty, you can set up a meeting to talk about the terms of payment.  It is better to accept a series of payments from a customer and keep him as a good customer in the future.  Cutting the customer off because you demand a full payment is not a good idea especially if this is the first instance of non-payment.

Chasing after past-due accounts is useless if they have exceeded your limit for receivables.  Always monitor your accounts receivable to avoid neglecting a past-due account.  It is also a good practice to establish a personal relationship with customers.  Open communication lines are important to avoid wasting time and effort.

The Cash Protection Agency are a debt collection agency and offer credit control services that allow businesses to collect money from their clients quickly and without damaging valuabel customer relationships. Give us a call on 0800 433 4113, we’d love to chat.

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In any courtroom, evidence should meet specific standards to be admissible.  It is important to determine the authenticity of evidence when a person’s guilt or innocence is being judged.  Before admitting evidence, the court will take the necessary measures to ensure its relevance.

Before deciding to take any legal action, credit companies or organizations will need to consider the impact of a debt collection lawsuit.  The court may require the creditor to disclose certain information about their policies and systems that may be considered sensitive.  The company might not want to expose their network systems, source code and configuration systems.  When filing a lawsuit, the creditor should be willing to cooperate in provide all types of information needed by the court.

Authentication Process

The court will have to evaluate digital evidence beforehand to verify the claims of the proponent.  In a debt collection lawsuit, the proponent is the creditor.  The court will need to examine the evidence presented by the creditor.  Hearsay evidence is immediately rejected.  The court may require original copies of documents for authenticity and verification.  There are other issues that the court will have to consider to determine the admissibility of evidence.  Failure to consider such issues may lead to the proponent losing the case if evidence is to be excluded.

One of the most important elements of determining authenticity of evidence is maintaining and recording the chain of custody of evidence.  Digital evidence is admissible in court if authenticity is proven and verified.  Every person who handled the evidence will be required by the court to testify.  The testimony should declare that the evidence presented in court is the same evidence before there was a lawsuit.  The number of people who will testify along with the creditor should be kept to a minimum.  They will need to demonstrate that the digital evidence has not been altered in any way since it was collected.

This is a necessary procedure in court to demonstrate chain of custody.  Without the solid chain of custody, it could be argued by the defendant (debtor) that the evidence may have been altered or mishandled.  The defendant can say that the creditor has replaced the original information with incriminating evidence.

Best Practice

Creditors are advised to keep copies of relevant documents.  Photocopiers, scanners and computers are acceptable tools in creating exact duplicates.  The copies of digital evidence are generally acceptable.  Presenting a copy reduces the risk that the original document will be altered.  Generating a paper printout of digital evidence is accepted and considered equivalent to the original.  The creditor will have to ensure that the copy is clear and shows all information that the original has.

Modern technology has eliminated the need for recording transactions on paper.  Keeping digital records will make documentation more convenient and accurate.  Organizing and retrieving files will not become a time-consuming task if everything is already stored in a computer.  A back-up file should always be maintained for security purposes.  The credit company should also take the necessary steps to ensure digital files are protected from unauthorized use.

When your debt collection agency is not performing well as it used to be, you need to think about finding a replacement.  There are many debt collection agencies out there who would love to do business with you.  Staying with your current agency may prolong the collection of your much needed funds. Here are some things to think about:

Detecting the Problem

Some debt collection agencies may be having problems with handling their accounts due to problems with manpower, finances and licenses.  Compare the current performance of your collection agency with the previous month’s, quarter’s or year’s progress reports.  This will give you an idea how they have been performing over time.

Call Attention to Poor Performance

You may want to inquire on the progress of your accounts and remind the agency of their sluggish performance recently.  The agency should treat that reminder as a warning.  You can write them a formal letter as a way of stating your concerns or you can personally talk to the manager of the collection agency to voice your opinion on the matter.  Informing the agency of the problem will give them the opportunity to correct it and improve their performance in the coming days.

Terminate Agreement

Review the terms and conditions between you and the agency.  There should be a section detailing the conditions for the termination of agreement.  Check if one of the conditions applies to termination of contract due to poor performance.  This will serve as your valid reason for terminating the services of the collection agency.  If the agency continues to show poor performance without any significant improvement, it’s time to settle your fees and move your business somewhere else.

Search for a New Collection Agency

Once you have settled the fees from your previous agency, you would not want to hire another one like it.  This time around, you have the chance to choose carefully.  Ask for a referral from friends and acquaintances.  This will help you narrow down your search for a reputable collection agency.

Set New Standards

List all the things you want out of a collection agency.  The list can contain the criteria or standards you want to implement when you hand over your accounts to the new agency.  You may need to check a sample of their collection reports and other pertinent data to have an idea of the agency’s output.  Visit offices and talk to managers in person to get a feel of how they operate.  Inquire about fees and collection methods.

Once you have gathered the necessary information, it is time to select your new collection agency.  The agency should be licensed and charge reasonable fees.  You do not want to add more costs to debt recovery than what you have already spent with the previous agency.  Make it clear to the new agency that you will not tolerate poor performance this time.  Give agents the assistance needed to collect from your debtors to help them succeed in recovering the money owed to you.

If you are planning to hire a collection agency to take care of your past due accounts, you need to set your own standards to help you decide on the right collection agency.  A reputable collection agency can make it easier for you to maintain a good relationship with that agency. Here are a few recommendations:

How To Decide on One Agency

Most creditors will look for two or three agencies to handle the collection of overdue accounts.  Hiring more than one collection agency will encourage competition among them.  You can compare their performance based on their methods and actual collections received from debtors.  From this point on, you have the option to decide on keeping only one collection agency to handle all the accounts.

How to Compare Agencies

Start your search by finding a list of reliable and trusted collection agencies.  You need to choose licensed collection agencies as an assurance of their credibility and performance.  Visit their offices and inquire about collection fees and handling accounts.

Check how collection agencies communicate with debtors.  If the debtors are your customers, you would not want to offend them by sending a very aggressive agency to collect money. There are less annoying but persuasive methods such as letters and phone calls.  As a business owner, you want your customers to do business with you again instead of running in fear when they see you.  Ask for a referral from other creditors you know.  They might be able to help you look for a reputable collection agency and save time calling each agency.

Execute A Written Agreement

You will know a good collection agency when you get results within a reasonable amount of time.  Maintain a good relationship with your chosen collection agency by laying down all your expectations from the start.  This will give collection agents an idea on how your accounts should be handled and the expected time frame.  Execute a written agreement of terms and conditions.  The agreement contains the fees to be paid to the agency, procedures, status reporting and collection or payments report.  This document must be signed by both parties for compliance.  The collection agency will have to honor the stipulations of that agreement.

Keep Communication Lines Open

Provide all the necessary information they need regarding customer accounts.    Keep communication lines open once the collection agency begins working on your accounts.  Agents may want to know additional details about the accounts.  Do not hesitate to ask questions or make clarifications.  A good working relationship is based on trust and honesty.  If you want to change the collection procedures for a particular customer account, you need to let the agency know right away.  Instead of talking over the phone, ask for updates and status reports in person.  This will make your relationship with the collection agency personal.

The Cash Protection Agency specialises in debt collection and we would be happy to help you with yours, please feel free to call us on 0800 433 4113.

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A collection agency is a third party collector hired by creditors to recover their debts.  The collection agency can include the original creditor who collects debts using a different name.  Collection agencies can also include companies with the sole purpose of debt purchase and collection.

Collection Agencies as Last Resort

Many financial institutions, credit card companies and private individuals will turn to collection agencies when they fail to collect their own debts.  Creditors usually send out demand letters, make phone calls and attempt all forms of communication in recovering debt.  If debtors do not respond after a series of letters or calls within a few months, creditors have the option of sending the overdue account to a collection agency.  The other alternative will mean writing off the account as a bad debt.  Creditors would rather hire a third-party collector to recover the money owed to them.

Methods of Debt Collection

If the debtor continues to ignore the phone calls and letters of creditors, and has made no attempt in setting up a repayment scheme, the creditors will have no choice but to turn over the account to a collection agency.  The creditors will also file a delinquency report to the credit bureau for future reference.  Creditors usually do this when the debtor has not made any contact after four to six months.

Collection agencies will work with creditors to obtain the necessary information before seeking out the debtor.  Creditors have access to a computer database made available by credit bureaus.  The information from the database can be used to find debtors even if they have moved away from their original location.  Debtors may have unknowingly provided vital information such as a new credit card application or data regarding rent in a new place.

Bill collecting is a serious business.  Collection agents take their jobs seriously.  They will begin tracking the debtor once the overdue account is passed on to their agencies.  Professional debt collectors know the importance of striking early to increase their chances of collecting the debt.  Before a collection agency goes after a debtor, collection agents evaluate their chances of success.  The agency may have hundreds of delinquent accounts.  They have to prioritize those accounts with the highest likelihood of collection.

A collection agency will keep a percentage of the total debt once successfully collected.  Hiring collection agencies can be more expensive when the debtor’s account is old. The longer the debt has been outstanding, the more difficult it can be to collect (as there is greater likelihood that the debtor has gone out of business or moved).

Some collection agencies charge per phone call or letter.  When high fees are involved, the collection agents are usually extemely motivated in their tracking and collecting efforts.

Collection agencies will begin tracking debtors using every possible resource.  They have clerks that work by sifting through a mountain of information to retrieve the information needed by agents.  They can get information from credit applications made in the last few months.  This includes information provided by creditors.  Collection agents will contact friends and family to determine the location of the debtor.  They do not identify themselves as debt collectors to avoid getting misleading information.  The methods of debt recovery for collection agencies vary according to the type of debt and the willingness of creditors to pay.

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It’s an unfortunate fact of business life. Sometimes, clients don’t pay their invoices on time, and some may neglect to pay them entirely. There are things you can do to remedy this situation, however, so that you face it much less often than you otherwise might:

• Always, always sign an agreement: Don’t ever start a project without having your client’s signature on the dotted line of an ironclad contract. The contract should spell out what both parties’ duties are; yours, of course, will include completing the project to specifications as spelled out in the contract, and your client agrees to pay the established price — with possible installments or provisions specific to the agreed price as well.

• Ask for installment payments: Particularly if a project is large and is going to take some time, it’s very common for companies to request that their clients pay them in increments. For example, you can ask for 25% down, 25% additionally once the project is half done (with 50% of the total payment to date), 25% when 75% of the project is complete, and 25% upon completion.

• Give clients bonuses when they pay invoices on time and penalties when they pay them late: Let’s say, for example, that you have a 30-day payment policy for the invoices you submit to clients. That is, clients who pay within 30 days of invoice submission are in good standing. However, perhaps you have clients who regularly push those invoice payments to 60 or even 90 days. (Again, those clients may actually end up not paying it all, which is why having a kill fee and incremental payments clause built into your contract with each client is a good idea). There’s a way to entice clients to pay their invoices on time or even early that’s relatively painless both for them and for you. For example, you can give clients a 2%, or even 5% discount on the entire project’s price (depending on your cushion, how much you charge, and how large the project is) if that client makes the final project payment within 10 days of receiving the invoice. At 30 days, clients are considered in good standing so that if they pay their invoice amount by that time, they don’t get a price break, but they don’t get charged extra, either. At 60 days, here’s where you can begin to penalize clients for late payments. If at 60 days a client has not paid his or her invoice, you can begin to charge 2% of the project price as a late fee. At 90 days, there’s an additional 2% for a total of 4%.

If that STILL doesn’t work

All of this assumes, of course, that you’ve kept in good communication with the client so that you know his or her particular situation and have tried your best to be reasonable, flexible, and fair. If all else fails and clients still have not made payment by the end of 60 days, as one deadline you might set, you can submit unpaid invoices to an outsourced credit control company. This company will follow up and make sure clients pay these invoices. These companies are professional and will provide you a necessary and valuable service as you can turn your attention to running your business. They not only help make sure you receive payments you are due, but they do so professionally and with courtesy, so that you don’t unnecessarily damage your relationship with your clients and remain in good standing with them.

Companies often find it difficult to effectively manage their credit control functions. It is difficult enough for business owners to juggle all of the other things that a successful business demands before then chasing debts for which they did the work months ago. The problem is, without effective credit control, companies get further in debt and their cashflow deteriorates.

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Here are some tips for improving credit control:

1. Communicate with your customers: Regular communication with customers can prevent debts amassing. If you maintain regular discussions with your customers & have a sensible policy for following them up if their debts are overdue, you will save yourself a lot of time. Furthermore, if you can visit customers, this can help a great deal. Not only can you pick up payment but you can also see how the business is working and look out for any danger signals that the business might be in trouble.
2. Do not rely entirely on company credit checks: Company credit checks are en exellent way of minimising the downsides of working with clients (you want to know if they’ve had credit or payment problems before you start working for them) and they are a great way of getting a snapshot of your customer’s ability to pay but they will only provide information up to a fixed point and cannot predict the future. You clients can lose orders and customers themselves and a credit check will not tell you about the morals of the company owner.
3. Credit Control can improve customer relations: Credit control and customer relations do not have to be opposites. You do not have to damage customer relationships by making it clear that you would like to get paid. Credit control can even enhance your relationship with a customer. If you can arrange a schedule of payments with a customer that is having a short-term cashflow problem, you can build a great deal of loyalty.
4. Ask for references if you are getting large orders from a new company: Many large companies ask for references before they enter into a financial relationship or before they change their payment terms. This is entirely acceptable and shows that you are serious about your business.
5. Agree terms with your customer: Ensure that your customer is clear about the terms you expect from them and that you have discussed this in person and in writing.
6. Make sure your invoice includes all necessary information: Sometimes accounts departments can hold up payment until a missing detail is found. Invoices can be put to one side and forgotten. Call the accounts departments of your clients and check what they need. Maintain a good relationship with them and they will look out for you.
7. Speak to your client’s accounts department before the invoice is due: By calling a week before the invoice is due to be paid to ensure that they have anything, you can save all manner of problems from lost invoices to missing details etc. Be polite with them – they might not have the authority to pay you and will be working in good faith.
8. Don’t be afraid to ask for your money: You’ve provided the goods or servcies, you’ve worked in good faith and now that money is yours. If you were a footballer or Radio 1 DJ, you would go on strike for less.
9. Develop procedures to follow up on debts: By having a procedure, by making your clients aware of it and by following up on it, you can prevent problems from occuring. When people know where you stand, they won’t take liberties.

These credit control tips can save you a lot of time and effort. We would add a 10th tip:

Consider outsourcing your credit control. We can save you a great deal of time and money by taking on your credit control. A call to find out more is free and we can talk you through our credit control service and give you an idea of the time and money you could save. We specialise in credit control and in offering a reliable, consistent service that will maintain your relationships with customers and enable your business to grow through better cashflow and through you spending more time doint the work that makes you money. Call us on 0800 433 4113

Credit controllers have an important role in the life and success of a business. All businesses suffer with getting money in quickly and maintaining good relations and getting regular payments from their customers.

Small businesses are often those most in need of a credit controller and yet they often feel that they have little time or money to fulfil that role. In reality, businesses will not grow without effective credit control as they will not be able to generate a sufficient cashflow to fund that expansion.

So what does a credit controller do?

In short, a credit controller manages debts, reduces a company’s debt burden and deals with late payments. There are a number of other things that credit controllers will do to save time & money including:

• Keeping in regular contact with debtors to ensure that they will pay on time or arrange a schedule for payment
• Keeping records of contact made with debtors to help businesses identify risky debtors and to provide an audit trail for any legal action that might be necessary down the line
• Credit checking new customers to ensure that customers are not given payment terms that they can’t meet and to identify any customers that a business might not want to have or might want to give restrictive payment terms to
• Resolve problems of missing paperwork for clients
• Instruct debt collection firms or solicitors if payments are significantly overdue
• Dealing with liquidators
• Work with and reconcile debts and the aged debt register
• Report to management enabling management to take swift decisions on problem customers before those customers end up owing too much

All businesses need a credit controller or someone to fulfil a credit control function. Whether they undertake these tasks in-house or whether they outsource their credit control services to a company like ours, the value of a credit controller is far in excess of the costs of bad debts.

For companies looking to outsource their credit control servcies and to have professional credit controllers work on their behalf, there are immense benefits. For a start, the company doesn’t have to worry about collecting debts; staff costs aren’t incurred in collecting outstanding monies and fewer costs are incurred that relate to bank and overdraft charges. Outsourced credit controllers can often save companies a great deal of time, effort and, most importantly money, they can prevent businesses from working themselves to death just to collect debts and they can help businesses to focus on what they do best, their core services.