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You may be surprised to learn that credit control is one of the most important aspects of any business. After all, it is credit control that helps you to protect your cash flow and ensure that you are able to pay your bills on time.
Unfortunately, many businesses make credit control mistakes that have a negative impact on their cash flow.
In this blog post, we will discuss five of the most common credit control mistakes; and how to reclaim your credit control to protect your business cash flow!
What Are Credit Control Mistakes?
The sale of goods or services through the extension of credit to clients; such as cash discounts, payment terms, credit standards, and debt collection policy is often referred to as credit control.
Credit control mistakes are errors that businesses make in these credit and collections processes. These mistakes can have a number of negative consequences, including:
– Delays in payments
– Higher interest rates
– Increased risk of default
– Reduced credit availability
What Credit Control Mistakes Could My Business Be Making?
Ignoring Overdue Payments
One of the most common credit control mistakes is ignoring overdue payments. It is important to remember that every day that an invoice remains unpaid, your business is losing money.
It can be daunting to chase late payments, however, ignoring them won’t get you paid! If you don’t have money coming in, your cash flow will suffer and your business may not be able to fulfil all of its obligations. In addition, if you do not take action to collect payment on overdue invoices, your clients will begin to think that it is acceptable to pay late.
You must begin the procedure to reclaim what you are owed as soon as an invoice becomes overdue. As typically, the longer you wait to chase overdue payments, the less likely you are to get paid—which means it’s critical that you act quickly.
Not Remaining Professional
It’s frustrating when your consumers are misbehaving, but it’s important you remain professional. Credit control is all about maintaining a positive relationship with your clients and striving to get them paid on time.
Credit control can at times be difficult, but it’s important that you always remain polite and respectful when trying to contact debtors. Remember: the goal is to get them to pay their invoice, not alienate them!
It’s not necessary to be abrasive with clients, and it may harm your brand and relationships. It’s important to remain consistent with your credit control process, setting the right tone and wording throughout to help you achieve the best results.
No Clear Credit Control Process
The key is preparation, having a flowchart or clearly set out strategy planning out the steps you need to take to chase overdue payments. Without a strategy in place, you may find yourself making ad-hoc decisions that could impact your credit control.
An effective credit control process should be tailored to your company and the industry you operate in. It should also be reviewed regularly to ensure it is up to date. Not having a clear credit control process can lead to confusion and inconsistency when trying to reclaim what’s owed to you.
In addition, It’s important that you train your employees effectively so that they know how to execute all your set procedures and adhere to them thoroughly. The key is consistency.
Non-effective Invoice Terms
When was the last time you reviewed your business’s invoices?
An invoice that has been well-designed and effectively implemented can significantly improve payment times while reducing the risk of errors on an invoice resulting in payments disputes.
In addition, you can protect your company by laying down clear terms and conditions ahead of time. Meaning you can protect yourself in the future if chasing overdue payments goes sour.
If you don’t have terms and conditions in place or haven’t reviewed them in a while, now is the time to do so!
Taking on Too Much
Maintaining an efficient credit control strategy can be challenging and time-consuming. Especially when chasing late payments can also take up your extra time.
If you feel as though you’re taking on more than you can handle, and crucially missing out on growing your business as a result; it’s an indication that you need to outsource your debt collection.
By utilising the services of a debt collection agency you could improve your cash flow and get back your time to focus on your business!
Learn more about When Is The Right Time To Reach Out To A Debt Collection Agency?
Reclaim Your Credit Control With The Help Of My Debt Recovery
The best way to discover if your case or circumstances are suitable for debt collection agency support is to get in touch. We can listen and advise the best course of action depending on your situation and needs.
Since 2009, we have recovered funds for over 1,000 clients, both in the UK and worldwide. Due to our professionalism and how we handle cases; My Debt Recovery now has a number of clients who were originally debtors that we collected monies from. Our work covers all business sectors and we work on behalf of solicitors, accountants, surgeons, funeral directors and many other business owners.
If overdue or late payments are impacting your cash flow or taking time away from growing your business, reach out to discover how we can help!
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