Keeping on top of credit control is a vital part of any business; it lets you know that you’re being paid on time for the jobs you’re doing and helps your cash flow perform at its best. There are several credit control tips and tricks you could apply to your processes that’ll make invoicing run smoothly.
Here at The Isobar, we’ve developed our own credit control software, enabling you to get your head back into business, without stressing about late payments. Take a look at our ideas here to set up a credit control process without any hiccups.
When you give credit to a customer or client for your products or services, you’ll more often than not need to be paid when the end of the month comes around, and that’s where credit control comes in. A credit control process is the strategy that’s implemented by a business to keep on top of the invoices that need to be paid by customers and clients.
As is the nature of business, many customers will not pay their invoices until they are reminded to, so it’s important that your credit control process includes reminders sent out on the exact day invoices are due, if not even a few days before. Having good credit control will not only reduce the debts owed to your business, but will improve cash flow too, meaning there’ll be no need to pay interest on your overdrafts and your business will be less likely to go into debt itself.
When implementing a credit control process, it’s important to think about how you’ll be chasing invoices from the get-go. To begin with, make sure you assess the risk of your existing and any new customers from day one. You could even consider researching your customers’ credit management to decide whether they’re even safe to do business with. This nips any potential problems in the bud, before they even have chance to blossom into something bigger.
It’s sensible to set out a clear credit control process for your business so your accounts team know exactly what they should be doing and when. This makes for a streamlined credit control operation that’ll keep your customers in line and in the know about when they’ll be required to pay.
When invoices need to be sent, make sure they’re on their way quickly and ensure that every one is accurate. An error-ridden invoice will not be paid and you may not even be made aware that there’s a mistake, so if you want to be paid on time, make sure your invoices are correct. Also ensure to address them to the relevant person to get the right eyes on your invoice swiftly.
Keep your terms and conditions as clear as day so there can be no misunderstanding when your customer or client receives your invoice. You should also make clear the steps that will be taken if an invoice is paid late, such as any additional charges. You could even consider encouraging early payment with small discounts if the invoice is paid before it’s due.
One of the most important aspects of credit control is maintaining a positive working relationship with all of your customers and clients. The nature of credit control means that sometimes uncomfortable conversations need to take place, so having a good relationship will make those phone calls that bit easier and even more effective.
As part of your credit control process, there needs to be a plan in place when the due date passes by without a payment. When you’re waiting for late payments to come in, keep checking the business bank account so you can be made aware as soon as the payment does come in, so you’re not chasing an invoice that has actually been received.
In the terms and conditions of your credit control process, you may have mentioned that a late payment will incur additional charges. This could be late payment interest or compensation charges.
To keep on top of credit control, firstly, remind customers of the payment schedule when they place their order, so they are aware when they should have paid by. As soon as the invoice becomes overdue, send reminder letters, texts or emails out so your customer or client is aware that their invoice is now late and they may soon be subject to additional charges. Send subsequent emails, texts or letters every week from this date to encourage payment. Following these concise steps should mean that there’ll be no need to take further action, and you can continue running your business smoothly.
When you want a helping hand, Sage 50 helps you to manage your credit control and your outstanding debtors by enabling you to view transaction histories, so you can see when they last paid you. You can also record contacts for both customers and suppliers, so you know who you need to call when an invoice becomes overdue. Customer credit control from Sage 50 also allows you to make payments, dispute items, handle bad debts and even write off invoices if and when you need to.
Over at The Isobar, our experienced and savvy team of developers have created a credit control software specifically to support your business through the ins and outs of invoicing. Our software integrates with Sage, which automatically follows up your invoices via email, SMS or post, saving you heaps of time to realign your focus back to your business growth. Come and have a seat at The Isobar to switch over to a system which will keep your credit control running smoothly.