Monday 2 September 2013

The Four Pillars For A Successful Credit Control

Many thousands of businesses go bust every year simply because they are owed money and can’t juggle the cash flow. Systematic, well planned credit control practises must be put in place right at the start otherwise your company will join the mountain of other failed firms. Checking references, getting credit reports and examining company business information is a sign of strength for a business and lets your customers know you are serious about credit control

1. Get a detailed application form filled out correctly by your potential customer.

So many businesses are in the rush to get orders that they do not do the necessary groundwork when setting up customers, in some instances not even knowing the correct legal entity or billing address. All of these minor details can slow up getting paid on time!

2. Do the necessary credit checks on ALL customers small or large.

When you are looking to supply a customer you need to carry out a credit report, these reports are instantly available through credit reference agencies online and can be purchased on a 'Pay As You Go' basis at under £10 per search or within bundles which can cover you for a years unlimited credit reports. 

In my professional opinion the bundles are the way to go as you get so much more within them.

3. Stick to your credit limit and credit terms.

From the outset you will need to be tough as customers will look to bully or bluff a higher credit limit from you, so stick to your limit! This also happens when it comes to payment with some customers looking to set their own terms of payment. You will need to be firm and not waiver because if you allow them an inch they will no doubt take a mile! 

You could even make a telephone call or send an email gently reminding your customers that payment is due on a certain date, this shows good customer relations but also that you have your finger on the pulse.

4. Don't be afraid to use debt recovery agents to recover outstanding monies owed to you.

This is one step that businesses do not grasp as much as they possibly should. You can utilise the professionalism of an outside debt recovery agency without costing yourself or your company time and lots of money. Any debt recovery agency worth its sort will not charge upfront fees, they simply apply a commission charge if and when they are successful. 

Obviously doing the chasing and sending letters has an expense to yourself so if you are getting nowhere with a delinquent debtor why not pass it on to the agency and let them recover the money for you. 

Usually a good commission rate is between 7 - 12% on any monies recovered, but remember it is your right to add costs and interest to the debt from the date it becomes overdue.

If you would like to know more or have any questions please email me on martin@creditserve.co.uk or follow me on twitter @creditserve

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