Top Tips For An Effective Credit Control Process

Your credit control process is going to be one of the main components required for an effective business model. It is imperative that you have an effective process in place to assist your success. Guildways work with businesses every day and in this article we share our tips for implementing a best practice credit control strategy.

Always do your research on current and new customers

By researching your current and potential customers you are able to evaluate the risk that may present itself, in relation to receiving prompt payment. We have found that credit checking services such an Experian and Equifax are great for obtaining credit reports and flagging any risks. The credit report will highlight previous county court judgments, if a company was late to file their accounts, notices to strike off, etc. All of which are red flags in respect of giving credit.

Act promptly

Make sure that invoices are paid promptly and on time. As a credit controller it is going to be essential that you can establish the right balance between being proactive and not upsetting your loyal customers.

Some ways that we have found, which help to avoid delay include:

  • Send invoices by both email and post – this way it is more difficult for the customer to make the argument that they did not receive the invoice.
  • Ensure that details on your invoice are clear and correct – a more straightforward invoice will be less likely to incur questions around why it was raised, which can also be used to slow down the payments process.
  • Include clear payment terms and conditions in the initial working contract. This can then easily be referred back to when required, even directly via a PDF link in instances where electronic invoices are sent through.
  • If you do take on a new customer that you are unsure about, it is possible to request advanced payment so that this is made before products/services are supplied.

Communicate and manage

The best business relationships are built on trust and transparency. The driving catalyst here is good communication. This does not have to be endless emails or telephone calls, rather a simple courtesy call or reminder email would be much appreciated as sometimes there is a genuine reason for payment being delayed.

It is advisable that your credit control process also includes an, internally, agreed time scale that your customers are allowed before further action is taken to recover the sum owed. For example, closure or suspension of their account or a hold put on existing/future orders. By monitoring your customers and having an understanding of how they operate you will be able to establish those that are frequent late payers and those that just need that extra courtesy call or email to remind them payment is due. This information will enable you to prioritise which invoices you outsource to a third party for collection.

Include your entire team

To make it as easy as possible for your entire team to follow your process, have a written procedure in place. This should outline, step by step, how you issue an invoice and the follow up process for chasing payment. In turn, everyone is able to play a proactive part in protecting the cash flow of your business.

Implement right tools

Having effective credit control management involves finding the right tools and software for your business. Simplicity is going to be key here because over complicating the process will make it difficult to implement the process to the whole team. We have found that advanced software is becoming fundamental for credit control departments due to the fact that it allows you to store all of your data in one place and completely automate the process. This includes your follow up emails.

Remember to take into consideration every part of the journey when it comes to finding the right process for you. The creation of the invoice is just as important as the steps you have in place to handle communications with your customers and deal with your late payers.

Guildways are able to help with you to implement an effective approach to your credit control process and play a vital role in protecting your cash flow.

Get in touch by email at [email protected] or telephone on 0333 340 9000 for more information about our services and how we can assist.

20 Sep 2022