Credit control in a nutshell is an approved system used by entrepreneurs and banks to ensure that credit is handed to borrowers who have the potential to pay. Businesses will, therefore, extend credit to clients with a solid credit history, they additionally find ways of encouraging their clients to pay before the agreed-upon time, and this they do by running offers, for example, the offers from the crown stationery Net 30 application.
Apart from minimized cash flow and poor debt management, there are many other reasons why the supply business fails to grow. The first one being the differences in opinion between the founders and the investors, and in other times businesses will either launch too early or too late when the window of opportunity has already closed.
We will, therefore, discuss the primary factor that largely affects the growth of businesses (credit management) complete with the pointers that you should consider to improve the credit control process.
1. Ensure to have clear and enforceable terms and conditions-
some customers are cheeky and will look for loopholes when things are not working right for them. So, the best thing to do once you start a new relationship with a client, furnish them with clear, enforceable, and consistent terms.
Ensure that the terms regarding invoice payments are fully explained and easy to understand. Also, outline the actions that your company will take if the customer fails to fulfill his part of the agreement complete with your tolerance policies in case of delays.
2. Create and send your invoices on time-
So the first thing to do before you send out your invoices, counter check to ensure that it has no mistakes, check the address to ensure that it reaches the right person, don’t use the post as they may take longer to get to the relevant person, so emailing is the fastest method. Lastly, ensure that you don’t take a lot of time before you send out the invoice, so once the order is fulfilled send out the invoice.
And when you are sure that the invoice has left your office, follow up to confirm whether it has been received with the person responsible for the payments, so that you are not bombarded with excuses in the future that they didn’t get the invoice.
3. Implement the easy payment methods-
unless you want to be fed the cock and bull story of the cheque is in the mail, find fast and alternative methods with which your customers can send you cash. There are, therefore, some easy digital methods such as using the credit or debit cards, cheques, or BACS among others.
4. Check on your customer’s pattern of credit management-
when you get into an agreement with a customer, it won’t hurt to go the extra mile and find out how they have been managing their credit. The above information is available in the various online services and from here you can make an informed decision of whether to do business with a specific client and which credit terms would work best with them.
5. Create a watchlist-
Now that you have streamlined everything it is time to take note of who is delaying payment and who is paying on time. You will, therefore, come up with two lists one for those who pay early and the other for the late payments, so you know how to sell to them in the future, or negotiate different credit terms where they could have to first pay the deposit.
6. Trust your instincts and be reasonable-
when clients are giving excuses there is a lot that you can pick, that is whether they are telling the truth or they are lying. If your instincts tell you that they are lying then ask for documentation if they can’t provide then you will have to follow up on them closely, keep them under your radar with the constant reminders, at least after every seven days.
7. Improvise ways of encouraging early payment-
Give your clients the option of sending you money using their most preferred method. You can run offers to mainly attract those customers that pay late. Also ensure that your banking details are clear and with regards to your location be sure to use a method that is relevant to all, businesses located in the rural areas wouldn’t really appreciate the use of credit cards.
Final Thought
The above tips are to help you control your credit so that you don’t fail your suppliers, researching your clients gives you information that you can use to come up with the best credit terms, which ensures that your business doesn’t suffer in the end.
