Effective credit control techniques
The Ultimate Guide to Effective Credit Control Techniques: 2021 Edition
Discovering effective credit control techniques can help you to implemenent a more structured approach to managing cash flow in your business. You could also consider outsourcing your credit management to take away the stresses and strains that come with credit control.
Before making a decision, we put together 10 things you wish you’d known earlier when it comes to outsourcing your credit control followed by our ultimate guide to effective credit control techniques:
1. Outsourcing credit control ensures experience
Credit controllers are trained professionals who have years in negotiating experience, which means they know the most sensible route to returning the debts you’re owed.
2. Credit control ensures vital cash flow
It doesn’t matter if you’re a limited company or a sole trader, the management of company finances is crucial to the survival of a business.
3. Build better relationships with your customers
Outsourcing your credit control to credit controllers who have been trained to politely and professionally prompt payment from your customers, without hindering your relationships.
4. Access to resources
When you outsource your credit control, you’re gaining all of the resources necessary to track down debtors.
5. Get the job done quicker
Most companies don’t have the time or resources to manage credit control alone. When you outsource, you’re hiring professionals who can swiftly and efficiently manage the situation.
6. Track and monitor
Credit controllers often utilise the latest in tracking technology, which has been designed to monitor and track your customers’ outstanding debts and the payments they’ve made.
7. Avoid bad credit
A good credit controller can manage your payment terms and conditions, making sure they meet your business’s cash flow needs, so you can avoid bad credit.
8. Get branded systems tailored to your business
You can choose to have your customers believe that they are only communicating with your company when they are in fact speaking to trained credit controllers.
A credit controller’s system can be integrated so that it works in conjunction with most other systems that you already use.
10. You can purchase Credit Control from just £1.49 per day
Credit control from First Capitol is available from just £1.49 per day, without lengthy or complicated contractual tie-ins.
Effective Credit Control Techniques: The Ultimate Guide:
Any business which relies on credit should have robust credit control procedures. But with Creditsafe reporting that unpaid UK business debt hit nearly £739 million in the first quarter of the year alone, it seems that there’s never been a better time to get a grip on your sales ledger.
So, here they are, effective credit control techniques to help keep your credit control department on top of customer accounts.
1. Assume late payments will happen
We don’t like it any more than you, but it’s an unfortunate fact that people who pay their company bills on time are a rare thing. Working to the assumption that everyone will pay late will encourage you to get rigorous strategies in place to deal with these people.
2. Post out invoices as soon as possible
It sounds silly, but get those invoices sent out as quickly as possible if you want to get paid as soon as possible. We’ve come across businesses who leave months or weeks before even preparing the invoice.
3. Keep credit checking
Your customer may have passed your credit check a few years ago, but are they going to pass a credit check in 2018? Keep checking and monitoring those you extend credit to.
4. Stick to the rules
It’s too easy to become friendly with customers, but remember that you’re not their mate. If your terms state payment in 30 days, don’t be persuaded to extend them “just this once”. Assert your authority and ask for payment on time, politely and firmly.
5. Send reminders
Credit control works best when it’s proactive. Call that customer whose invoice is about to hit your payment deadline and give them the nudge they need. This will show that you are on the ball so they won’t be tempted to push their luck.
6. Ask for help
No invoice ever needs to be written off when you have companies like First Capitol ready to assist. Involving a professional debt recovery like First Capitol will ensure that every invoice will be paid to keep your cashflow where it should be.
For many companies, monitoring their customers’ credit control is an overlooked area, but with the help of First Capitol, you don’t need to be one of the companies that fall victim to late or non-payers.
We understand that chasing late payments can be a time consuming and frequently fruitless job. Allow us to step in and help resolve unpaid invoices on your behalf, and keep your company income coming.
Keep improving your credit control process
Establishing and maintaining credit control is one of the most important ways you can create a healthy cash flow in and out of your business. Especially if you’re a start-up business or SME – late payments from suppliers to clients can be so impactful to your business they could cause you to close. To avoid this risk, you need to establish a clear credit control process, and most importantly, stick to it.
Credit control process
Establishing a clear credit control process is simple in a few steps. Firstly you need to ensure you’re realistic about the ability of your suppliers or customers to pay you, and consider when you need to be paid after you have completed work to ensure that payment for the job doesn’t impact your business operating. Once you set a timetable for this you need to communicate internally and clarify with the teams responsible why having invoices paid on time is so crucial. Be clear with the people you expect to pay you what your payment terms are, the consequences if those terms are missed and then the process that will follow.
Before committing to work with a certain supplier or customer, check their credit history. If you’re worried about their report you might decide it isn’t sensible for you to work with them on this occasion rather than take the risk. Or, you can ask the business to pay a certain amount up front, say 50%, mitigating some of the risk to yourself.
Once work is completed you need to ensure you invoice quickly and with all the accurate and relevant information so the customer is able to pay on time and in full. The more consistent you are with your own duties, the more likely the person or business is to pay you on time, as they understand the consequences if they don’t. It’s also crucial to stay positive and courteous in your exchanges, even when you’re chasing payment, as your customer or client may simply have been busy or mislaid the invoice, yet any hint that you distrust them can sour the relationship.