Why you’re failing at credit control
Effective credit control is vital to success. If you aren’t being paid on time then your cash flow will be affected and your financial troubles will quickly escalate. Here we explore the reasons why you are failing at credit control:
1. Not having a dedicated credit controller
If you struggle to keep on top of credit control then you should consider using an outsourced credit control provider instead.
2. Unclear payment terms
Being unclear about payment terms means that customers are far more likely to miss a payment. Make sure payment terms are written clearly on all invoices so there is no room for dispute.
3. Terms and conditions are out of date
Failing to review your terms and conditions can leave you open to missed payments. As your business grows you must update your terms and conditions to ensure your payments are made on time.
4. Delayed invoicing
Delayed invoicing is common in small companies. If you are slow in giving an invoice then companies will be slow in getting it paid too.
5. Making mistakes on invoices
Making mistakes on invoices will lead to them being sent back and queried, which means that they will not be paid in time. Your customer may use this as an opportunity to challenge you to buy themselves more time to pay to improve their own cash-flow.
6. No missed payment strategy
Failing to establish a strategy for missed payment means that this can go unchecked. Having a procedure that issues a warning and then utilises a collections agency will ensure that you do get paid promptly.
7. Failing to credit check customers
Failing to credit check customers means that you will have no idea if they will be able to pay. You should always check that your customer is good for the credit, no matter what the value of the credit is.
8. Supplying customers who haven’t paid
Continuing to supply people who have paid late takes away any power that you have had. If customers know that they can still get what they want then they won’t ever bother to pay on time.
9. Failing to charge interest or fees on credit
Failing to charge interest or fees on credit means that the debt remains the same no matter when they pay. A customer is far more likely to pay up front if they know that the debt will remain the same.
10. Trying to handle the situation by yourself
Trying to handle credit control yourself without the expertise and knowledge of a debt collector is the most common problem. Make use of outsourced credit control companies so you can stop failing at credit control.