Confident Cashflow

When you started working, Credit Controller was probably not in your top ten of preferred job roles. It wasn’t even on my list, I fell into it, as most credit professionals do, so I’d be very surprised if it was on yours!

But now you’re a business owner, love it or hate it, it’s one of those many hats you find you have to wear.

Whether you’re doing it yourself, have someone on your team doing it, or are outsourcing your credit control here are ten steps you can do to improve your credit control success.

1. Invoice Promptly

Fact: No one will pay you until you’ve sent them the invoice.

So if you delay sending out your invoices you are delaying payment.

The best time to send your invoice is as soon as the agreement has been made, if your client agreed to payment up front! Failing that, the next best time is as soon as work is completed, or goods sent.

If that is impractical then dedicate a specific time each day or week to send invoices and stick to it.

If you only invoice once a month you are giving your customers up to an extra month of credit. What could you be doing with that money if it was in your bank account?

Getting your invoices right is a crucial step in getting paid on time.

2. Define your Credit Control Process

You need to be very clear on whose job it is to follow up with customers about payment and how and when that should happen.

Will you use automated reminders from your accounting system? – Remember if you chose to do this, you’ll need to make sure that all payments received are reconciled quickly too. You don’t want to upset customers by chasing for something they’ve already paid!

Electronic and paper communications are all very well, but nothing beats picking up the phone. Be clear on when that should happen. A pre due date courtesy call can go a long way to nipping excuses, such as haven’t received the invoice, in the bud.

No business is too small to have clearly defined processes.

3. Understand Your Customers’ Payment Processes

Sometimes as small business owners we don’t appreciate that making a payment for larger business isn’t as straightforward as logging on to a banking app and pressing send.

The bigger a business gets the more pairs of hands an invoice has to go through before it gets paid. Any conversations you may have had about terms will likely be with the buyer in the business, not the Accounts Department so it’s important you have that conversation too.

You need to understand what needs to happen to your invoice before it can be paid to you. Some of the questions you should ask are:

• Where should you send the invoice?
• Does it need a purchase order number?
• Who needs to approve it?
• Who decides when it goes on a payment run?
• When are the payment runs?

Knowing these things will help you to understand if your payment terms are likely to be met and, if not, if you can live with that.

4. Regular Credit Checks on Larger or Problematic Customers

Every customer you give time to pay poses a risk to your business.

So, it seems reasonable to keep an eye on those customers who make up a big chunk of our turnover, or who have proved to be troublesome in the past.

In the same way that the engine management system in your car will give you an early warning of something going wrong, monitoring your customers using a credit reference agency could give you the heads up that they’re experiencing difficulties which could translate into late payment to you.

5. Make It Easy for Customers to Pay

If you want payment by BACS, don’t make your customers search for your bank details, put them on your invoices and statements.

Card payments? No problem. Don’t make then have to call you to pay, put a link on your invoices that takes then straight to a payment portal. Most cloud-based accounting systems can link to apps like Stripe or PayPal.

6. Write It Down

You know I said that nothing beats a phone call for effective credit control. Well, writing still has its place.

The devil is in the detail, or rather the follow up.

If you agree something in a phone call, confirm what was agreed in a follow up email. Do this straight after the call while it’s fresh in both your minds. That way when you have to move on to the next step, you have a clear record of what was agreed rather than some hazy recollections.

It’s also good practice to keep a log of all the contact made with the customer and diary any follow ups required.

7. Be Precise

Don’t accept vague promises like “I’ll get it sorted” or “I’ll call you back”. Always get a commitment to a timescale from the customer. If they’re reluctant to give one don’t be afraid to ask what is stopping them from making that commitment.

Another good technique is to say something like “That’s great. If I’ve not heard back from you by lunchtime tomorrow, I’ll give you another call”. You set the deadline. Just be sure to make that call if necessary.

8. Follow Up Promptly on Broken Promises

If you don’t follow up when you say you will, or if you let a deadline slip without chasing up, you are signalling to your customer that it’s not that important after all.

Use a diary system to note when you need to follow up and stick with it. That way you show your customers that you’re serious about getting paid.

9. Build Relationships

As with all contact with your customer, credit control calls are another way to build rapport.

Ask about that holiday, or if they’re feeling better. Treat the person you’re talking to like a human being rather than the business they work for.

Too often business owners shy away from asking for payment because they think it will ruin the relationship and put future business in jeopardy, but done correctly, it can enhance the relationship with your customer.

Firm but friendly is the way to go. At the end of the day your customer expects they will have to pay for the goods or services they’ve had from you so you’re not asking them to do something out of the ordinary.

10. Get the Right Skills

Credit Control has its own skill set and not everyone is comfortable with it.

In vest in some training for you or your team member and make sure everyone in the business is well versed in the process so they can support rather than working against. There’s nothing worse than someone who is trying to make a sale telling the customer that it’s ok to pay the outstanding balance at the end of the month, when you’ve been working hard to get that payment in by the end of the week!

If you’re not sure what training you need, get the help of a credit professional to guide you in the right direction.

Finally, if you’re not convinced that you, or anyone on your team, has the time or inclination to do this essential job then outsource it!

Want to find out more? Make booking a call with Confident Cashflow your first step.