It’s a brand new year and time to create a fitter business for 2018. One of your main goals for your business whether it is large or small, should be credit control.
Effective credit control is one of the most important aspects to running a business and if not managed correctly, it could hinder your success.
What many businesses fail to realise is that the process of avoiding the problems of late payment and bad debt begins as soon as an order is placed – and your credit control procedures should reflect this. It’s a vital process that starts with knowing your customers before you sell to them and only ends once you have been paid.
Getting clients to pay invoices and on time is proves difficult for many business owners and can be the most frustrating aspect of running a business.
Many businesses expend a lot of time and energy into ensuring their business is growing and in excellent shape, but fail to recognise the importance the credit control has.
Although credit control can often be regarded as a time-consuming and attention-grabbing drain on resources, failure to closely monitor your customers will only result in reduced cash flow. A practical credit control procedure will maximise your business cash flow given that you adopt good practice and a disciplined stance on non payers.
There is are no 100% guarantees in credit control, however there are things you can do to maximise the probability of payment and stay in control.
If these tips are implemented early on, you can be sure to minimise any future credit control issues in 2018, allowing you to focus on the important stuff;
1. Expect late payment – It is a reality of business that very few companies actually pay their outstanding accounts/debts on time. Assume that each invoice will become overdue as this prepares you for the reality. This will also encourage you to ensure you have the right strategies in place to deal with such.
2. Invoice faster- get paid faster– If your business is sending invoices out once every few weeks, you are in actual fact holding up your payday. Make sure that invoices sent to clients as quick as possible.
3. Credit Check – Start by running credit checks on new clients and by discussing your prices, service fees and payment requirements with new customers before you do their work.
4. Conditions – By having written invoice conditions and discussing them with your client you are clearing communicating how you expect to get paid, the date in which they have to pay by and the amount they owe to you.
5. Be authoritative – Some businesses are reluctant to ask for payments that are overdue? Why? For fear of losing them as a customer? – How many suppliers have you stopped using because they wanted to have their invoice paid on time! Do you really want customers that do not pay anyway?! A polite but firm approach when requesting payment is sensible.
6. Pursue Payments – Many businesses owners are reluctant to chase clients until after their payment due date. Don’t wait, if you see the payment due date approaching send the client a pleasant and forthcoming email reminder.
7. Do not write off – Never simply write off a debt unless it is a very low amount. You should always have recourse for non/late payers in your credit control strategy. A relationship with a Professional & accredited Business Debt Collection firm will only serve to boost your profits.
It really will pay to make improvements to your business’s credit control procedures helping to make sure that 2018 really is a successful and productive year.