We often talk about the best approach to business finance as if anyone can do it right, but there are certain credit control key skills that can play a big role in determining how successful an individual is in the role, too. In many cases, small businesses find that they lack these credit control keyRead More
We often talk about the best approach to business finance as if anyone can do it right, but there are certain credit control key skills that can play a big role in determining how successful an individual is in the role, too.
In many cases, small businesses find that they lack these credit control key skills, rather than being ignorant of the practical steps towards background checking new clients, issuing invoices promptly, and chasing down overdue debts.
But it is important to understand the qualities that give a credit controller the best chance of success – if only so that you can recognise the areas in which you need help from a third party.
First of all, you need to have a sensible outlook on risk. A lot of small business leaders – especially those just starting up for the first time – are at one extreme or the other when it comes to facing business risks.
On the one hand, some take a very cautious approach, because many small businesses fail in their first few years, and this can lead to turning down some potentially very lucrative contracts.
At the other extreme are the gung-ho gamblers willing to speculate to accumulate – and without a clear outlook on reducing risk, this often leads to disaster.
Good credit control is about managing risk, not eliminating or ignoring it, and background credit checks help to do this in a logical and objective way.
You’ll need to extend this sense of organisation to your invoicing in general, too, as issuing invoices when work is completed, reminding the customer what they owe, chasing them on deadline day and then recovering any outstanding debts is an ongoing process.
There’s no break from this, and limiting yourself to one invoicing date per month will only delay how quickly you receive some payments, and is likely to result in you missing non-payment for up to a month too.
One of the main credit control key skills is the ability to keep on top of all of this – often with the help of a credit control calendar or computer program – so invoices are issued promptly, and payments are chased as promptly as possible too.
Finally, patience is perhaps the most important of all the credit control key skills, especially when an invoice is overdue.
You need to be pragmatic about what will get the most money back as soon as possible – that often means waiving interest and penalties on payments that are only slightly overdue, or remaining calm when dealing with clients who just don’t seem to appreciate that they need to pay you.
At the same time, you also need to be ready and willing to act, and commencing court recovery action isn’t always a sign of impatience – sometimes it is simply the best thing to do.