Improve Your Credit Control Process & Procedures With Our 6 Top Tips

There’s no easy answer when it comes to keeping cash flowing in your business, in fact cash flow alone can be a major headache for many struggling businesses in the UK.

Whether it’s because of slow paying customers or a heap of bad debt, cash flow problems can affect every business. The best way to combat this is to implement a clear credit control strategy, with money coming in you can help your business grow. Our experts have put together 6 top tips to help your business with credit control.

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Tip 1:
Set Out Your Credit Control Process.

We believe it is absolutley crucial to set out exactly what terms of credit your company works to from the get go. Having a clear structure and process for the finance team to follow will help keep the whole team on the same page. Late or delayed payments put your business at risk of being in bad debt, so why not set up a reminder scheme whereby you nudge owing customers about their delayed payments. This should be set to a realistic time scale and the credit terms should be adhered to by all staff members, for all customers.

Tip 2:
Positive Working Relationships Go A Long Way.

The words ‘Debt Collection’ can have lots of negative connotations and can often jeopardise relationships with customers. Your credit control process doesnt need to be one of a threatening nature, try building up your relationship with customers and suppliers. Open and clear channels of communication can go a long way in ensuring an effective credit control process. Just adding courtesy calls when you receive paperwork, or in advance of sending invoices can help alert their team and shows that your busienss is friendly, approachable and professional.

Tip 3:
Make Sure You Invoice Quickly & Accurately

The easiest tip to implement is to make sure that your team invoice quickly and accurately. Set out in your credit control procedures that your team should send invoices as soon as orders are fulfilled, email invoices rather than sending in the post, double checking that invoices are addressed and sent to the right person, and triples checking there are no errors or mistakes on the invoice before it is sent out. Like we said in tip 2 above, maybe add in a courtesy call to let your customer know the invoice has been sent – this way if there is an issue with payment, you can have a conversation with your customer and address the issue.

Tip 4:
Work With Your Customers To Encourage Early Payment

A good way to streamline your credit control process is to do a little research into your customers, this can be overlooked as reporting back can be costly, but worth it. Running things like credit checks can give you a good idea of how much time you need to put into chasing payment and following up invoices. If you know a customer is more likely to struggle with payments, then take any action you can to encourage early payments, for example adding account details to invoices to encourage online payments or offer incentives to help promote early repayments.

Tip 5:
Don’t Leave Late Payments Too Long

It’s easy to loose track of late payments and let them spiral into weeks and months of unpaid invoices. We want to help avoid that happening by encouraging the use of the above tips but also keeping an eye on unpaid invoices and taking action when needed. You should never just ignore unpaid invoices, rather set up a watch list to start the nudging process for businesses who are late to monitor these payments, after all these could affect your cash flow massively. Some customers may have legitimate reasons for late payments and these could happen a handful of times, whilst others may be more persistent offenders. Create a watch list of these offenders and ensure that every step is followed to control that credit.

Tip 6:
Forecast Cashflow and Trust Your Instincts

Cashflow is a reliable source of information for the business, directors and key stakeholders can make business growth decisions based on forecast cashflow and revenue. Having a clear idea on what debt is outstanding and outlining rough revenue can make a huge difference to the business. If you’re having difficulty with some customers then trust your instincts, you’ll have probably heard a lot of excuses about why payments are delayed but make sure your team feel they can question customers and ask for reasoning. You’ll only be able to help the business grow by providing accurate cash flow forecasts and any bad debt will have to be questioned, so make sure you have the answers.

So there you have it, a few tips to help your credit control team manage customers, suppliers and cashflow better. If you’re interested in changing your accounts software or you are looking for a reliable accounting software support partner then please feel free to contact our team today. We would be more than happy to discuss how your current processes work and recommend the software we think would suit your business requirements based on our 30 years of experience.

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