If you do regular business with slow paying clients, you are probably spending much more time chasing payments than you should be. This is not the best use of your work time and can undermine your business relationships with those clients.
Prioritising credit control (payment collection) activity will go a long way to improving your collections and help you improve your business relationships and productivity.
If you feel you haven’t yet achieved the size of your business to warrant a credit controller, reconsider, as this is one of the biggest factors slowing your business growth. If you are wondering why, please read on to see how just a few very important yet basic steps can improve your collections.
Try to achieve a ‘yes’ to each of the following questions:
- Before accepting an order do you agree the payment terms in writing?
- Has the invoice accuracy been checked?
- Have you fulfilled delivery of goods and service and can you prove it?
- Have you called your customer and confirmed the invoice has been received?
- Does your invoice contain clear instructions of how, when and where to pay the amount?
- Do you keep accurate records of calls, emails, letters which go out to your clients?
Many problems causing late payment will originate from you, the creditor. Incorrect or missing invoice details such as:
- Missing vital information (no Purchase Order number)
- Invoice sent to the wrong address,
- Queries with goods or deliveries left unresolved for too long.
Managing and collecting payment of your invoices is a profession. Prioritise this process and get paid faster. A qualified and experienced credit control professional, following Best Practice Credit Control procedures will improve your cash flow.
Completed sale = you get paid
Until you are in receipt of your money your customer is holding on to money which is yours. You should be asking for it, and regularly! Credit controllers build relationships with key agents within your clients business. Accounts payable agents in particular appreciate liaising with a professional credit controller because they make the process of invoice payment easier to manage for both departments.
A professional credit controller can help with:
- Resolving invoice errors
- Ensuring future invoices are correct first time round
- Providing necessary documentation on time
- Sending payment reminders
The above, plus more, go a long way to showing you have a professional approach to doing business. At the same time you are ensuring you get paid faster and avoiding an awkward conversation with your client at a later stage. If you wait until payment is (overdue) – you are putting your business relationship at risk – undermining the hard work and time spent building that relationship to begin with.
Be proactive when communicating with your client – contact them earlier, ideally by phone. This way you can change the dynamic of the conversation to a positive one. Instead of chasing an overdue debt you are making a courtesy call to ensure your client has everything they need to make prompt payment. If you prioritise the Credit Control Process and speak to your clients sooner, the results will surprise you.
Do you have the time to manage each invoice, without fail, on your ledger in such a way?
These are just a few of the steps involved in the work of a professional credit controller. You can outsource credit control as a function to experienced teams of professionally trained credit controllers.