Tips for Effective Credit Control
Having an effective credit control function will hugely impact growth for any business. Many business expend a lot of energy into ensuring their sales function is in excellent shape but fail to recognise the importance the credit control has. Here are some of our tips for ensuring your business’ credit control is effective:
Identify poor payers
As you chase for payment on a regular basis, you will gain a better understanding of what kind of payer each customer is. From this you will then have a good idea of how each customer should be approached and the collection strategy to use; for example, do you need to be quite firm and give time limits? Should you ring prior to the invoice falling due to remind them? Do you get a better result from telephone or email collections?
Prioritise your collections
Prioritising your collections by value will ensure that you achieve more return for your chasing. Smaller value invoices will still require chasing, but using a letter or email cycle for your chasing will suffice; however, should your smaller value invoices are become more and more overdue, ensure you chase straight away, otherwise you run the risk of your customers assuming you will accept poor payment practices from them.
Know the details of each customer account
Making detailed notes is an integral part of your collection strategy. Notes should be dated, concise and easy to understand should your colleagues want an update also. Review past notes prior to making contact with a customer so that you are aware of any ongoing issues, past discussions on the matter, past payment performance, and the current status of their account.
Set deadlines for your customers
When asking your customer to look into their account for you (e.g. chasing to get an invoice approved for payment) you must inform them of when you will call back for an answer. This will add urgency to your query and will be more likely to receive an answer.
Escalate if necessary
If things aren’t moving forward with your current contact within a customer’s business, don’t be afraid to escalate the matter to a manager or director for answers. Often accounts payable need the approval of said managers or directors before making payment, therefore speaking to them directly means you are less likely to be forgotten or ignored.
Take a look at our outsourcing service, which provides an effective solution to your credit control issues.
