In business, your credit control practices are important to start the new year on the front foot. After all, credit control is a fundamental part of any business and credit management process.
If you have been seeing an increasing number of late payments or a higher than average DSO (Days Sales Outstanding), then now might be a good time to take stock and see what can be improved.
As we begin 2022, there are certain credit control practices that we think should be left behind for good!
Continuing to Supply Late Payers
We know that it can be tempting to continue supplying credit or work to late payers, especially if they are regular customers. After all, you don’t want to lose their business!
However, by doing this you are only exacerbating the problem and increasing the chances of them not paying at all. In fact, a recent study showed that companies who supply credit to late payers see an increase in bad debt rates of up to 72%.
So what can you do instead? Well, one solution is to require a deposit before starting work or delivering goods. This will help ensure that you get paid on time – and it might even encourage your late-paying customers to become more punctual!
Don’t Give Customers Too Much Credit
One of the main reasons businesses go bust is because they have given their customers too much credit. It can be easy to get into this habit, especially if you are trying to win new business or keep your current clients happy.
However, it’s important to remember that extending credit is a risk and should only be done when you are confident that the customer will be able to pay back what they owe on time.
Be Strict With Payment Deadlines
This goes hand in hand with not giving customers too much credit – if you set payment deadlines and then stick to them, it sends out a message that you are serious about credit control. This will help to ensure that customers take your invoices seriously and pay them on time.
In addition, don’t wait for customers to get in touch if they have missed a payment deadline – start chasing them straight away. The longer you leave it, the more difficult it will be to get the money back.
Wasting Time Chasing Old Debts
It can be tempting to spend a lot of time chasing old debts. After all, you want to get as much money back into your business as possible. However, this is not always the best use of your time and resources.
Instead, try to focus on building better relationships with customers who are currently paying their invoices on time. This will help to improve cash flow and ensure that you don’t experience any late payments in the future.
If you’re looking to recover old debts, using a debt collection agency can be an effective way of recovering overdue payments. Giving you back time to focus on growing your business.
By adapting your processes and focusing on building better relationships with customers; you can ensure a successful credit management year ahead!
If you have these processes in place and your customer(s) still won’t pay? This is where My Debt Recovery comes in.
Business Credit Control with My Debt Recovery
My Debt Recovery offers a range of debt collection services that can help business owners improve their cash flow in 2022.
Debt recovery can be a long and difficult process, but with our help, it can be a lot easier. If you’re unsure whether your case is suitable for debt recovery, please contact us today for assistance. We can help understand your situation and provide the best plan of action.