Is your credit control working effectively?

 Wednesday, 10th March 2021 10:03

Arguably one to the most vital business functions, a company’s credit control should be a straightforward process; services or products are rendered, invoices sent out, invoices paid.

However, life is rarely that simple and the role of a credit controller can be challenging at best.


Here we look at some of the solutions that can be applied to keep cashflow moving in your business and improve your credit management efforts.   


Everything works better with a process


Having a well maintained and effective credit control process in place will enable a business to optimise its cash flow while avoiding debt accumulations. Implementing a clear ‘order to cash’’ strategy is key. The basics for a strict system should be to remain consistent and automate processes as much as possible – invoices sent out promptly, via the same method with the same payment terms. In addition to this, statements should be sent out on set dates, and reminders and follows ups completed regularly within defined time frames. With distinct stages to follow throughout the credit period, you can adopt a co-ordinated and professional procedure for every invoice.


If the resource is not there – enlist the experts


Good credit control reduces risk, increases cash flow, and builds business confidence. Many businesses choose to outsource this element of their business finding recruiting, training, and keeping expert credit controllers a challenge. Controlaccount works with global brands, SMEs and not for profits to provide support in this area. Our clients find that using our white labelled credit control services frees their team up to handle the less time-consuming accounts, leaving us to deal with anything slightly trickier. To read more about our credit control services here.


Move quickly on late payments


Remember, the more overdue an invoice is, the harder it is to collect. And it seems that payment terms are becoming longer and longer; periods of market uncertainty – for example, the recent Eurozone crisis and Brexit, often trigger a push by companies to lengthen payment terms. Or it could be that a company, or indeed an individual, may have simply overlooked an outstanding invoice. Whatever the reason, it is not good news for cash flow and can take time and resource to recover late payments, putting additional strain on your business.  The key to minimising the impact of late payment on your business is to keep an eye on your sales ledger as this will tell exactly which invoices are overdue and when an invoice exceeds its credit terms. At this point, it is best practice to open up a conversation with your customer to understand why payment has not been made and work with them to clear up any disputes.  Should this not resolve the issues and bring about payment, it would be prudent to speak to a debt collection agency who can advise next best steps for recovery whilst simultaneously protecting your business relationship.  Controlaccount has been providing debt recovery services for over forty years and offer a no collect, no fee option on any recovery.


Keep communicating with your customers


When a customer exceeds agreed payment terms it can be frustrating. But often further frustration lies in trying to ascertain the reasons behind the non-payment. In most cases, businesses or individuals owing a debt will eventually settle any outstanding amounts, but there will be the occasional account that proves more challenging. Always keep lines of communication open to understand why an invoice is overdue – this can often range from a customer not knowing when they need to pay, how to pay or perhaps even a dispute on the service or product you have provided. Once you understand the issue, you are halfway there to solving it.

However, there will be occasions when your conversations don’t improve the issues and, in some cases, can actually aggravate the situation further. This is where an external debt recover agency will have more success as their training provides them with strong mediation skills to resolve issues and expediate the collection process. With the end result being the overdue sums in your bank sooner, keeping your cashflow moving.

Controlaccount has been providing order to cash solutions to businesses for over forty years. To view our range of outsourced services to enable you to increase efficiency, reduce overheads and achieve your business goals, click here or call 01527 388388.




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