We hear it all the time: the sales function in any company is the most important cog in the business wheel. Well, I disagree. Before all the Sales departments start beating their chests, let me explain.
Yes, a good business needs a good – no, excellent - sales department; everyone knows that a business can’t generate income, profit and growth without it – and it takes a particular skill set to sell. It’s not for the weak hearted. In addition to a solid sales department, a business must have a healthy cash flow in order to pay their own invoices, pay salaries, invest in more product, kit or services. And this is down the credit control department. There’s no point selling, if your customer doesn’t pay.
Credit Control is integral to a successful business and an effective process should begin before a sale is even made. A business needs up to date terms and conditions and an effective credit agreement in place that suits the customer as well as your business. This means diligent checks on financial, trading and credit behaviour to protect your business through a business insight portal. There needs to be a full understanding of who you are dealing with and if they have the capability to pay you.
In order to make sure that money comes in and that you aren’t financing your clients’ business, Credit Control will possess a tight audit of what has been invoiced and when payment is due. It is vital that credit control departments are proactive in making sure that money keeps coming in on time. We all know that the more an invoice becomes overdue, the harder it is to recover.
And when there is an issue, effective credit managers are able to secure payment quickly and professionally with negotiation and - (and here’s the nub) without jeopardising any future business relationship. It’s a bit of a tightrope and if not managed correctly, companies can find themselves in court and that’s where costs can really escalate – without any assurances that businesses will get paid at the end of it all.
Bad debt is cited as the main reason business fail. Solid and effective credit control can prevent business from taking expensive bank loans or high interest or credit card charges at best. At worst? Making redundancies or becoming insolvent. Outsourcing credit control is often more cost effective than employment and training of staff (and with an understanding of litigation). Here at Controlaccount Plc we offer a full range of credit control, debt recovery and outsourcing services with our highly trained and experienced collection team. We work with leading global brands as well as SMEs to provide a fully integrated, professional and ethical service.