11 things most credit controllers forget to do
Having a professional credit control team in place has never been more important than it is now. Delinquent debt levels are set to reach record highs as rising interest rates put a squeeze on company and household finances.
The companies that come out ahead will be the ones that are most efficient at collecting unpaid debts. The question is, are your credit control team up to the task? To find out we’ve identified 11 things that the most successful credit controllers do but that most departments don’t.
Does your credit control department forget to do any of these:
1. Create a credit control plan
All credit control departments should have a written plan that dictates the process for the collection of unpaid debts. The plan should include timescales, the communications to be sent and when to escalate to a debt collections agency.
2. Credit check every customer old and new
Customers should be credit checked regularly, not just new customers, but existing ones as well. Company finances can change quickly, so that credit check you carried out five years ago may no longer be relevant.
3. Chase overdue payments the moment they are due
You’ll be amazed how many companies leave chasing payment until the very last moment. Once your customers know that you won’t start collecting overdue payments until six weeks after they are due, it only encourages them to delay further.
4. Oursource unpaid debts to a debt collections agency
There comes a point when no amount of calling will make a difference. If a customer refuses to settle its time to contract the services of a professional debt collections agency. It may cost you more, but you will at least get some money back.
5. Put bad payers on a stop list
As soon as a customer has failed to pay, it is a good idea to put them on a stop list. Your credit control plan should stipulate the time period before bad payers are placed on a stop list. Once this time has elapsed, it should be actioned. No excuses.
6. Charge late payment fees
There is no better way of encouraging people to pay than threatening them with extra interest charges. Late payment fees should be a part of your credit terms, so don’t forget to apply them when they are due.
7. Remember cash is king
Bad debts can affect cash flow, so it’s a good idea for credit controllers to be aware of current cash flow projections. This can help them spot potential problems down the line and encourage them to double their efforts to collect delinquent debts in order to prevent cash flow problems from occurring.
8. Never give up chasing debts
It can be tempting after 30 phone calls, 20 letters and the threat of court action to write off a debt and move on. This is especially true for smaller debts. But these small amounts soon start adding up to a significant amount of money. That’s why the most efficient credit controllers never give up chasing any debt, no matter how small.
9. Build strong relationships
One of the best ways of preventing bad debts from occurring in the first place is to build strong relationships with your customers. This not only increases the prospect of your bills being paid on time, it also encourages them to call you if there is a potential issue.
10. Ask for help when they need it
Good credit controllers know they can’t do everything themselves, this is a stressful job so it’s important that they know where to get help as and when they need it. No matter if its obtaining legal advice, contracting a debt collections agency or negotiating a settlement. Help is there if you need it, so make sure you ask for it.
11. Negotiate payment plans with delinquent debtors
There comes a point when it becomes clear that your debtors can’t pay their debts. At this point, you could employ the services of a debt collections agency for a settlement, but that still won’t get the desired result if they genuinely can’t pay. In this scenario, a payment plan can help you secure at least some of the outstanding debt.
It should be part of your companies credit control plan to evaluate how important a customer is to your business, which debt recovery measures to apply and the timescales involved. But no matter what your company policy is, always remember that the money owed belongs to you. Fearing customer reprisals should never be a basis for avoiding the collection of unpaid debts.