Credit control is essential
How can you improve it? Why should the extra work be put in? My invoices pay, why should I change what I do?
Business often find credit control issues creep up on them, they go from having a ledger of good payers, all paying on time and then something happens, a payer defaults, a payment bounces, a debt occurs, one or two accounts have issues.
By ensuring your processes are sound you can avoid some pitfalls and spot the warning signs before they cause any trouble
We all want to believe everyone will pay us, but that isn’t realistic.
Thoughts
Credit Control Processes
Probably the most import part of credit control is ensuring you have a sound process and that you follow it. All businesses are different but all should have a process to follow:
Good process starts as soon as new business is agreed, always ensure credit terms are agreed and clear. Likewise upon invoicing, ensure your credit terms, bank details and all required details are correct and show on your invoices.
Have E-mails and even call scripts prepared, create a list of objections you encounter and include responses to defuse disputes. Work each account with the same clear head, same objectivity, it doesn’t matter if they are a new or long term client, always act the same if you notice alarm bells.
Most importantly, do you have a plan for when payment doesn’t arrive? Do you escalate? Do you cease supply? Do you offer payment plans? When do you use debt collection? You should have this decided in advance with contingency plans and external debt agencies already sourced.
Rapport is an essential part of credit control, a good controller is like a brilliant salesman, only the job is harder, because the customer already has the goods
How can we help you?
FAQ
Frequently Asked Questions
We cover some common questions below
A successful credit controller must have a broad skill set. Any one can collect money, but a good credit controller will collect more accounts, more efficiently and retain customers. Bad credit controllers cause disputes, create bad relationships and ultimately, lead to accounts not getting paid.
The following personalities, or approaches lead to successful collections
- Tenacity – A good credit controller must be tenacious, always chasing, always proctive
- Friendly – People will help a freind, they wont help smeont who is abreasvie or rude
- Funny – Like above, people will much more likely to help someone they enjoy talking to
- Confidence- Friendliness, humour can help, but a controller must be firm. and confident when asking for payment
Warning signs are everywhere. You just need to remove emotion and view facts. we know you want the sale, but you want to get paid
These aren’t always signs you wont get paid, but they are signs you might not get paid, the latest invoice may be paid but think about the next invoice, the next sale, review the risk and act accordingly. Protect yourself, tighten credit terms, be firmer.
- Your contact never responds
- Your contact is always “out of office”
- Payment is not made as promised
- Payment is not made as value promised
- The customer is waiting for funding, a payment, bank approval etc
- The customer wishes to pay with credit card or Paypal (not a warning of non payment but of the credit state of your customer)
- Change of normality, they used to respond, used to chat freely etc, now don’t.
- Asking to delay
The biggest mistake, thinking you will get paid! It sounds horrible but its true. Companies would do their best to hold n to their cash as long as possible, if they don’t get a discount for early payment why wouldn’t they, its free credit.
But then time passes, the account goes past due, they have cash flow issues, another company is more successful collecting their cash, and you miss out. People will take advantage, its a sad fact of life. Don’t be that company, be tenacious, be persistent, collect what is due and on time
Another mistake is not following up promises of payment. if they say the money will be there, and it isn’t, follow it up, request “proof of payment”, ask for n immediate payment, don’t just believe, don’t just trust, this is a massive warning sign. Business will often use this to delay payment, if they think they will get away with it , they will keep doing it, at worst, they wont pay you at all. Escalate, chase, be firm, be persistent