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 debtRead More
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.
Here are some tips for improving credit control:
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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