All business owners know that good cash flow is vital to their success. The impact of late payments can be severe, sometimes resulting in insolvency. The process of Credit Control is about businesses only giving credit to customers who are able to pay. It also encompasses the enforcement process; making sure they pay on time. With a recent study illustrating that SMEs in the UK are owed £14.2 billion in late payments, our 5 best practice credit control tips are a must read:
1. Begin the Credit Control Process When the Sale Begins
An effective credit control process starts during the sales process. Make sure that you’ve agreed your payment terms with your customer, and finalise a clear schedule of payment. This is better than sacrificing time, effort and capital chasing invoices and payments later. Set the goal posts upfront.
2. Automate
Sometimes the credit control process can seem everlasting. But by automating it you will drive improved efficiency. For example, by streamlining and automating the creation and delivery of letters or electronic communications via a credit control platform, you save time and money. The average UK small business spends 120 hours a year on admin. Why not bypass that? Don’t be afraid of credit control software and the benefits it can provide you with.
3. Improve Client Communications
Credit control can be more effective when communication is improved. A week before payment is due, telephone the accounts team who can confirm that they have received your invoice and that payment is scheduled. Of course with credit control software, you’re able to monitor and enforce these credit control procedures without committing valuable employee resources.
4. Single View of Debt
A Single View of Debt (or Single View of Citizen) is a very powerful new tool in your credit control arsenal. It’s an holistic approach to debt recovery whereby a 360-degree view of each business or client can be presented. Also known as propensity modelling, it’s an holistic representation of the data held by an organisation about its customers. When it comes to credit control, this method can be used for gathering all the data about your customers and prospects and merging it into a single, unified record. Presented clearly in the dashboard of advanced credit control software, a Single View of Debt can empower individual debtors to pay off their arrears in a way that suits their specific circumstances. And importantly it helps your the cash flow of your business.
5. Keep Records
It may sound simple but accurate and detailed record keeping is the basis for effective credit control. Credit control software is undoubtedly the most powerful way to manage the process. You can also improve credit control decisions by integrating data from credit reference agencies or other web services with your accounting or ERP data. Overall advanced credit control software can provide a vast toolkit for your business.
It’s incredibly important for your business to be paid on time and within said terms. Get in touch with Lateral today to discover how our advanced credit control software can ensure your payment terms are consistently met.