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Credit Control is Not Sexy (But it is Important)
Credit control starts long before an invoice is due or overdue. It starts when you first speak to the customer.
What you have to do is ensure that you have good invoicing and credit control procedures in place to eliminate the reasons some people have to delay and/or avoid payment.
Factors which can help customers pay in good time include;
1. Make payment terms clear from the start when the customer signs up to avoid any misunderstanding later.
2. Make payment terms clear on each invoice.
3. Issue an invoice as soon as possible after the purchase is made or the task is completed. Some businesses don’t raise their invoices until the end of the week or even the end of the month. In most cases, the sooner the customer has the invoice the quicker the money is in your bank account.
4. Check all the details are correct on the invoice before it’s sent out. Delays caused by reissuing an invoice can lead to delays in the customer paying.
5. Credit period shown clearly on each invoice.
6. Credit period shown clearly on each statement. Make sure it is the same period as agreed with the customer at the outset.
7. Send statements promptly. Some customers don’t pay until they receive a statement, despite what you have agreed previously or it says on your invoices.
8. Send the statement earlier. Some businesses pay their invoices once or twice each month, if you send your statement a few days earlier than you are currently doing you could make an earlier payment run.
9. Have bank details clearly shown on each invoice. More and more customers are paying using online banking rather than sending a cheque. Ensure your bank account details are clear and correct.
10. Have bank details clearly shown on each statement.
Keep learning, keep improving
The above is from my Helpsheet ’21 Ways to Improve Your Credit Control’ that has developed and evolved over the years from the original ’10 Ways to Improve Your Business Today’.
Credit control, yawn yawn.
To all those who have read this far, well done. I know, credit control is not sexy or very interesting. In fact, it can be a thankless task sometimes, chasing people for money. No-one likes doing it. But if you don’t, customers will quickly stop paying, then your business will run out of cash, and you don’t need me to tell you what happens next. So stay on top of your credit control. Either do it yourself, or get someone you trust to do it properly to do it for you. Just make sure you do it.
Competitive advantage, work smarter
Some businesses think they don’t need to do it, and soon run into difficulties. Some of them will be your competitors. This is your opportunity. Be smarter. Be better.
Good luck with your business.
Thanks for reading