There is nothing wrong with having a robust and professional Credit Control process, however, many businesses are often afraid to assert their right to be paid.
Good Credit Control polices can contribute significantly to your business by not only improving cash flow but supporting other departments.
Your business needs to be paid on time for the hard work you do and there is nothing wrong with expecting your customers to do so.
These are the top Credit Control Myths that we’ve heard.
It’s not my job!
Ensuring customers pay on time is everyone’s job. FULL STOP.
Whether you are in sales, credit control or customer services whenever we come into contact with a customer we have a responsibility.
Good credit management starts the day the sale is made, not the day the invoice falls overdue. Payment terms should be made clear so there’s no confusion, right from the beginning!
Sales and credit control are in opposition..
A good Credit Control policy contributes to profit by ensuring invoices are paid on time and limiting the losses of the business. I do a lot of presentations to Sales people and I often remind them that a sale isn’t a sale until the money is in the bank. Until then it’s just promise! However, I also really think sales people can support their Credit Controllers as they often know their customers better than anyone.
Chasing customers will only upset them?
If approached professionally, good customers will engage with Credit Controllers
I am sure you have been chased for overdue invoices and I am also sure when that does happen, you don’t think it’s unacceptable that you are being asked to pay your bills on time!
Don’t forget, they owe you money and you have a right to ask them to pay.
People think getting tough will scare aware customers – Don’t let the fear of losing customers deter you from doing what’s in your power to collect late payment.
It’s only one day late so it doesn’t matter?
Allowing a grace period simply means that payment terms are being extended without valid business or policy reason being in place. As soon as an invoice exceeds credit terms it will begin to impact on your cash flow.
Failure to chase your customer immediately will also signal to your customer that it’s acceptable for them to be a few days late.
This can lead to them testing the boundaries of your business relationship – your customer will come to expect it. This can often mean you are giving them additional terms without approval or good reason.
If there is a genuine business case for them to be on 60 instead of 30 days, then let’s do it formally and not waste your time!
They were going to pay anyway?
This isn’t always the case!
It can be tempting to sit back and wait for your customers to pay on their own accord. However, studies have shown that unfortunately, not everyone is honest, and some companies will try to avoid paying as long as possible in the hope you will give up.
Don’t give them the chance to evade making payment.
You deserve to get paid for the hard work you do.
You’re perfectly within your rights to do what you can to get what’s rightfully yours, while it’s also worth considering how valuable a customer they are if they aren’t going to pay.
Don’t let customers walk all over you or force you into accepting poor payment practices. You need to be strict with your payment terms to get the desired results.
Waters & Gate offer both commercial and consumer debt collection. The service is based on a no win, no fee policy.
For free advice on any of the issues raised in this article please call Waters & Gate the credit management and debt recovery specialists, 029 2126 2130.