Credit Control and Credit management
“But if you want to continue to be slaves of the banks and pay the cost of your own slavery, then let bankers continue to create money and control credit.” – Josiah Stamp
Effective credit management prevents late payment or non-payment for the services provided by your business.
With more than half of businesses not surviving the first five years of trading, a general lack of funding, the increasing difficulty of bank lending … this all makes credit control and credit management more important than ever before.
If this is not enough to convince you, the top reason given for ceased trading is the cost of running a business and bad credit management practices.
Credit Control Procedures
It is essential before you start to sell the product / service that credit control procedures are put in place, not only to be more organised but to also maintain good customer relations and increase the business revenue.
Good credit management practices:
Download our business plan template
- Payment terms – Make the client aware of the payment terms and follow them tightly.
- Keep an audit trail – Software / bookkeeping services will enable you to keep an audit trail of all transactions and processes.
- Non-payment action – It is vital to introduce non-payment procedures, this can be anything from phone calls, reminder letters and suspension of service.
- Reports – Overdue customers / suppliers / KPI reports are very useful to keep track of everything outstanding and the collection figures from your credit controllers.
- Credit Limit – Introduce credit limits for your larger clients, this then enables you to receive regular payments and reduces the risk of non-payment or credit abuse.
Non-payment equals a 100% loss to the business! Credit control helps you to manage the risk of offering credit – seek specialist solutions and software that assists the process.