Getting paid is the most important part of your business – Lord Alan Sugar
Well, if that’s the secret of Lord Sugar’s success, then it’s clearly of paramount importance for all our businesses and organisations.
Effective credit control is an area that can be overlooked in businesses of any size. We all know the euphoria of winning new business. A new sale, fantastic!
It is important to ensure that not only is this a profitable piece of business for the company (unless you have other strategic reasons for this not being the case), but it is even more important to ensure that you get the cash through the door from this new sale. A sale is not a sale until the cash is received. Without cash, we have no business.
So, what is credit control and how can we ensure we have the most effective credit control system in place? Simply put, credit control is a system of checks designed to ensure that customers pay on time and do not owe more than the credit limit you have offered them. An effective credit control system can be broken down into 7 clear steps:
1. Know your customer – carry out relevant due diligence checks & understand the payment process of this customer
2. Establish effective payment terms and conditions
3. Invoice correctly and promptly
4. Monitor your debtors (customers)
5. Chase late payments immediately
6. Go legal if necessary
7. Never give up
In addition to the above processes, there is a real psychology in the debt chasing procedure and strong influencing and communication skills, both on the telephone and in letter-writing, are needed.
If you would like to implement or strengthen the credit control skills in your company and learn all about the above, you would be very welcome on our Effective Credit Control Skills course.
We look forward to welcoming you soon!
Author: Mike Smith