Here are our 6 top tips for credit control from setting credit limits, invoicing on time, through to chasing debts. Following these simple steps will help you streamline your credit control procedures.
1. Credit Check all new customers before setting their limit
Before taking on any new customers always be sure to credit check them to ensure they are worth getting a credit limit on. You have to be vigilant with your selection criteria and you can refuse to work with clients if you don’t feel their credit score is high enough, or if they have any CCJ’s against their name. Remember a late paying customer could damage your cash flow!
2. Make sure your paperwork is complete
When setting up a new customer, always ensure the terms and conditions are signed and complete before any goods or services are produced or started for your customer. Ensure
3. Invoice on time, send monthly statements and follow them up
Your invoicing process is an important part of your cash flow structure, if it’s not correct, it could interfere with your business getting paid. By getting your invoices out on time, you will be able to create a pattern that your customers recognise e.g we send our invoices out at the beginning of every week.
4. Be strict with overdue payments
As soon as a customer’s invoice has been missed for payment, you have to be strict, call or email them straight away, so they know you haven’t
5. Credit limit reached
Once a customer’s account has reached their credit limit, you need to inform them right away. A credit limit is there for a reason and cannot be exceeded, at this point you should place the customer on hold. It’s ideal to have a process where once a week or month, depending on how often
6. Chasing debts
You need to have a process when it comes to chasing customers who are persistently not paying their debt. Before you take the legal route you need to give your customers firm reminders that this is the route you’re about to take, this can give them the chance to settle payments beforehand. After your reminders, if they still do not pay, you can contact a debt collection agency or a solicitor and have debt collection letters sent. Usually, you can send an LBA (letter before action) this type of debt collection doesn’t add on any costs to the customer and can be useful to send first, as they can be sent via email as well as by post. If this isn’t successful you can then progress this to