Monday 14 May 2018

Interesting Credit Control Advice...

Whilst we all believe we are doing the correct up front checks and due diligence when opening new accounts many thousands of businesses in the UK fail every year simply because they are owed money and can’t juggle the cash flow. 

Systematic, well planned credit control practices must be put in place right at the start otherwise your company will join the mountain of other failed companies. 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 your credit control procedure. Please see some of the pointers we would suggest when setting up new and potential customer accounts:-

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 online through credit reference agencies and can be purchased on a 'Pay As You Go' basis at under £10 per search or within packages which can cover you for a unlimited credit reports, usually on an annual agreement basis. 

In my professional opinion reporting bundles are the way to go as you get so much more within them, such as the ability to monitor customers, enabling you to receive any changes that take place, professional business advice and amongst other things freedom to utilise the systems when you need to.

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, but fair 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 your company, 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

No comments:

Post a Comment