Now more than ever businesses need to take control of their debtors. Cashflow is the ‘lifeblood’ of every business and poor credit control will greatly affect your cash flow and your ability to pay your debts on time. By setting up strict credit controls and managing your debtors your chances of payment will improve if things go wrong for a customer.
Set up Credit Controls. These might include:
- Have a Credit Control process in place and follow it… set up a credit application form, which all customers must complete so you can ascertain who you are dealing with, the credit limit sought, directors guarantees, credit referees etc. Include the agreement terms and any penalties for late payment.
- Provide a written response to a credit application promptly either approving credit, declining credit or requesting further information. Things to included in a credit approval letter might be…. the amount of credit given, credit terms, guarantors (including guarantee forms), penalty/default terms and any other terms and conditions pertaining to the credit approval. Slow payers are much easier to follow up if trading conditions have been clearly laid out from the beginning.
- Look at requesting payment on invoice rather than statement.
- Mail/email invoices promptly to the correct recipient in the business.
- Make it easy to pay – have a facility for credit card payments, or automatic direct debit from the customer’s bank account or credit card on the day the invoice is due.
- Encourage customers to make payments directly into your bank account.
- Ensure you stick to the terms of trade you have set.
Building Systems Into your business
