Top 10 Credit Control Tips

It's something every business has to face sooner or later: what to do when customers pay late, or not at all. However, a good system of credit control will help safeguard your business from the menace of late payers. Here are ten top tips for effective credit control.

1.Understand the customer's payment process and procedures, for example if you know the date that they undertake their monthly cheque run you can time your statement accordingly.

2.Consider "pre-dunning": calling the customer before payment is due to confirm that your invoice has been received and that there are no reasons for non payment.

3.Establish a systematic approach to issuing statements, sending chasing letters (which gradually become firmer) and calling the customers.

4.Keep copies of any correspondence and notes about telephone conversations. Confirm conversations in writing and if possible gain the customer's written agreement to any payment promises.

5.Try to call back and speak to the individuals concerned rather than leaving messages on answer machines.

6.Consider other methods of contacting debtors, for example text messages to mobile numbers or email and fax.

7. Always remain calm but assertive on the telephone. 8.Follow up promptly on any broken promises of payment.

9. Shorten the process by emailing or faxing documents rather than posting.

10. If necessary consider stopping further deliveries once invoices are overdue.

The field of credit management is vast. Although not comprehensive, if you abide by these top credit control tips you’ll have a good chance of avoiding the problems caused by late payers. Many businesses have in-house credit control staff, but there are alternatives.

For example, factoring companies specialise in out-sourcing such services for their clients. They have specialist staff who undertake the collection of your sales ledger for you and in many cases this can be achieved with cost savings. The cost of factoring should be weighed against the cost of recruiting specialist staff or handling the task yourself.

It's also possible to receive credit insurance (non recourse, bad debt protection) which can eliminate the need for you to worry about which customers are credit worthy. The factoring company will research the customers' standing for you and grant an insured credit limit for each customer.

Article Source: http://www.debtfinancearticles.com.

About the Author:
Cashflow Acceleration Ltd is a UK commercial finance firm established in 2004, specialising in factoring, invoice discounting, trade finance and asset finance. We offer a free, independent quotation search service – just fill in this short form and find out how invoice finance could help with your credit control.