why effective credit control is so vital

Unpaid invoices are not limited to certain industry sectors and effect businesses across the UK. Since the advent of covid-19/corona small business owners are under much more pressure to remain profitable whilst dealing with potential staffing issues, service/goods delivery, maintaining client relationships and chasing payment on outstanding invoices.

how many invoices are paid on time?

In a recent Business Money article an analysis of over 2 million invoices sent by accounting software company, FreeAgent between January 2019 and June 2020, revealed that just over half (54%) of invoices were paid on time, meaning over 2 in 5 invoices are paid late. This is having a severe impact on the finances of SMEs, coupled with the fact that invoices sent by UK SMEs and freelancers plummeted by 33% over lockdown (April-June 2020).

With payments being pushed back and prolonged, cash flow becomes squeezed and for many businesses their ability to survive rests on whether they have an effective credit control function in place.

importance of effective credit control

For those businesses juggling and dealing with all the demands running a business brings, dedicating time to chasing unpaid invoices is an added burden. While a business is growing and adding new customers, it becomes time-consuming and complex to manage customer payments. Often business owners feel uncomfortable asking for payment of debts from their customers and it can be difficult selling your service one day and then chasing payment the next, for fear it might upset the relationship.

the risks of bad debt

The longer an invoice is left unpaid, the risk of suffering a bad debt increases – therefore it is vital to have an effective credit control solution working well and that the processes and procedures involved are taken seriously.

An experienced credit control service, whether in-house or outsourced, frees up valuable time to focus on profitable tasks and growing the business. Cash flow is extremely important for SMEs, and having customers pay on time and recovering money on unpaid invoices can be the difference between a business surviving or not.

Effective credit control is vital to the success of any business and has a direct impact of improving cash flow. that credit control offer a tailored credit control service and become an extension of your business - so you know your customers are being looked with after by experts focused on collecting your invoices in a timely and professional manner. Please contact our team to talk more.