December’s Frequently Asked Credit Management Questions
Here are our frequently asked credit management questions for December.
How can I prepare for confidential invoice finance?
Confidential invoice finance providers will want to see that your credit management processes and procedures are clear and appropriate for the business, as this will pose less risk for them in offering you finance. An effective collection strategy is the first step, ensuring you have the right people in place to chase for payment from customers; however, you should also look back to the order to cash process to understand which other aspects need refining so as not to affect collections, this could be your terms and conditions, production, delivery etc.
What should I put in a credit hold letter to customers?
A letter informing your customer that their account is on credit hold, should give clear instructions on how to rectify the situation, i.e. make payment. Therefore you should provide bank details, contact details and the amount that needs to be paid. It should also inform them of next steps if they fail to make payment by a certain date. To be customer focused, I recommend that you give your customers advanced notice of their account going on ‘stop’ so they have the opportunity to make payment to ensure service is not disrupted.
What are the benefits of outsourcing credit management?
Outsourcing credit management can have many benefits for a business including;
- Experienced and qualified people carrying out your credit management function costing you far less than employing someone of a similar calibre.
- More time to focus on the core aspects of the business
- Reduced debtor days through consistent and proactive chasing of payment
- Automated strategies, tailored for your business and your customer types through our CRM to deliver considerable efficiencies and therefore reduce cost to you.
Contact us today to find out how your business could benefit from outsourcing credit management.
What is the most effective way to collect unpaid invoices?
The most effective way to collect unpaid invoices will differ from business to business and the industry you are in. My best advice is to plot out a strategy to suit each customer type. The different strategies should use a mixture of techniques to chase for payment: i.e. emails, phone calls, letters, and statements. The customer type should dictate how much times you spend on each strategy and should always have an end to take legal action to recover the debt in the event of non-payment.
For more advice on different customer strategies and how to use them effectively please take a look through our Collection Strategy Toolkit or book on our popular training courses.
How can I effectively handle a difficult customer when asking for payment?
It is inevitable that you will come across a number of difficult customers when requesting payment; dealing with them effectively, without losing your temper and still gaining a successful outcome can be tricky but there are a few things you can do to help. Staying calm with an irate customer is one of your main objectives, as this will tend to be over the phone I find that taking notes of what they are saying gives you something to concentrate on and helps you keep your cool. Control the conversation by using your customers name frequently and asking questions, explaining that you are trying to help them.
