Simple Credit Control Tricks That Every Business Should Imply

There is no doubt in the fact that every company dreams of having a positive cashflow. While there can be a number of benefits to your business, every management keeps an eye on achieving two benefits out of them the most. One relates to clearing the payables on time and along with that, the surplus profit received in the form of cash can then also be invested into making the products and services better, well in time.

As both of the benefits contribute in making your business healthy and a well-reputed one, this then leaves no room for a question on why doing credit control is important. However, such an ideal business model is no longer a part of the real world and ever since the recession took place of 2008, late payments have become the new norm. The situation becomes even more common when bigger companies are supposed to pay small start-ups. In worst cases, the big fishes also know how to cut a deal with the liquidators and then return a very small percentage of what is owned.

Being a part of such a world, this then raises the need of knowing credit control tips so that you don’t have to rely a great deal on the debt collection agency in the end. So, below is a list of tips that will ensure that your cash flow remains in control and you get your money back in time.

All you are required to do is make these tricks a part of your credit control policies and we bet you will start seeing results better than your expectations.

1. Clear Payment Terms & Conditions

First up, if you haven’t done till now then you must write down your company’s new payment Terms & Conditions clearly and put it out there for the new and existing customers. There are two ways to convey the policies to the customers; one by either putting it on the credit application forms or you can always state them on the company’s invoices as well.

It has been often observed that businesses who struggle with their debt collection often don’t have any payment Terms & Conditions set up, and even if they do, then more often than not, their customers are not aware of them.

Hence, while debtors always know what they owe to your company, the Terms & Conditions form then serves to be your saving grace, in case the situation gets worse. Overall, setting out your Terms & Conditions in written form for your clients is a clever way to deal with debt related problems (which of course would be consistent from time to time).

2. Reward Clients For Early Payments

You must send a message across to your customers that your company values the ones who pay on time.

In fact, there is also a research to back this principle which is based on the example of employees who get scrutinised for the smallest of errors. They feel undervalued and often, as a result of that, their performance also drops. But while the company wants each one of its employees to improve, the right approach is to always give feedback to the employees on areas where they were wrong so employees then also know how to fix the errors and not to repeat them the next time. So, in a way you reward them by making them learn more about their work and in the long term that can eventually help them in their performances and achieving related bonuses.

In the similar way you should also reward clients for paying early or on time as well. A good way is to include Early Payment Discounts as a part of the Terms & Conditions as your receivables also aim to save their money. With that, your customers will also feel more valued and you would achieve the sales target faster.

3. Don’t Be Shy To Ask Client About Payment

In every country, there is a law of you being legally allowed to ask the client for payment after its way past the promised time frame often mentioned on the invoice. For the similar matter, if your business can afford then you must set up seperate Credit Control departments who will be solely dedicated to get you the money from your difficult customers.

They can always begin with asking the client about whether there are any problems once the invoices have been issued and also send a reminder email after 15 & 30 days. It is pretty much true that no business would intentionally like to pressurize their clients for payment, but if you know a certain client is already going through the financial crisis then this can be the only way to keep an eye on them and make sure that the money doesn’t convert into bad debt.

If you are not going to contact the employee after the 30 days period, the client will start to assume that you don’t need the payment on an urgent basis and as a result they may even delay the payment further.

4. The Right IT Systems

Fortunately, we now live in times when there are a number of CRM databases and softwares which can make cash flow and Credit Management super easy for you even if you are dealing with international debt collection. All businesses are required to do is to make sure that they are investing their money in the right ones.

If you are looking for more details on that then a successful Credit Management software is all about giving a clear overview of the processes in place for credit control.

We wouldn’t really recommend you to go for spreadsheets instead of a specialised software because managing errors in it with all the formulas can be a tricky thing. Software, on the other hand, provides you the ease of checking any customer anytime without having to worry about making an error unintentionally and as a result, you are always in control of your credit all the time.