6 simple tips to improve your credit control process

One of the main reasons a business may have poor cash flow is due to late payments, unpaid overdue invoices and bad debt. A poor credit control process is typically the main factor and will result in constant pressure on business cash flow until steps are taken to improve the credit control process. This article provides some simple tips and advice on how to improve your credit control process.

Is your credit control process SMART?

When creating a new credit control process or making improvements to an existing process, a great place to start is by using the SMART business principles. By this we mean, does your credit control process follow the rules of Specific, Measurable, Achievable, Realistic and Timely. It is important to create a credit control process that adheres to these valuable business metrics, this will ensure it can be run consistently and professionally day after day and deliver an improvement to your business cash flow.

Does your credit control process use customer reminders?

Customer reminders are a great way to make simple and quick improvements to your credit control process. Many organisations forget the use of gentle reminders when keeping in touch with customers whilst waiting for their invoices to be paid.  All too often a business will send an invoice and not follow up with their customer until the invoice is overdue. A gentle reminder either by telephone or email, will help to improve your credit control process and maintain good customer relationships.

Is your credit control process too polite or not friendly enough?

Many business owners simply do not have the experience and skills to chase late payments and overdue invoices. Quite often a business owner is too polite and courteous chasing a late invoice which means that the customer does not recognise the importance and fails to prioritise payment to clear the outstanding debt. On the other side of the scales, many business owners can take a late payment as a personal insult, and can become annoyed and abrupt with their customer by the fact the invoice has not been paid. Credit control is a subtle balance between professional politeness and assertive pressure. Customer circumstances are always different, some customers have deliberately missed payment whilst others have genuinely forgotten about the due date or may have cash flow issues themselves. Finding the right balance is essential when looking at ways to improve your credit control process.

How well do you know your customers?

This may seem obvious, but knowing your customers and also you customers knowing you is a great way to improve the business relationships, which will help to ensure that your customers pay their invoices as soon as they are due, as they will be more motivated to keep the positive relationship between the parties intact. Build positive customer relationships, improve the rapport, keep regular friendly and professional contact to minimise the chances that your customers delay or ignore their invoices when they are received.

Do you invoice on time or do you send invoices late?

A fundamental way to improve your credit control process is to ensure that you send your invoices consistently, on time, and accurately to the right contact when they are due. Many business owners get distracted with other business activities, which cause delays to sending invoices after sales. If you do not take your invoicing and credit control process seriously, you should not expect your customers to take it seriously. Improve your credit control process by making sure you invoice on time and to the correct contact.

How easy is it for your customers to pay you?

Make it easy to get paid. How easy is it for your customers to pay you? Are there different payment options? Can they pay by card? Are they online payments portals? What about PayPal? Are your bank details easy to locate for BACS payments? This is an important factor to bear in mind when looking for ways to improve your credit control process.

We hope this article on how to improve your credit control process was helpful. If you would like to talk more about your business, your customer invoice process and your debtor ledger please contact us for more information.