At Cove Accountancy Services, we frequently work with small and medium sized business owners, helping them manage the finances of their business more effectively. This might seem like a small task, but in reality, financial management is about much more than just putting together the accounts once a year and filing for VAT. It’s also about spotting areas a business could improve in, and helping them manage what has to be the biggest bugbear of the small business owners – late payments.
Credit control is used by businesses to ensure there is a system in place that enables customers to pay their invoices on time, and checks that the business is only dealing with customers who can actually pay when asked to. Smaller businesses, particularly new start-ups, are at risk from their cashflow problems. These can be easily remedied with proper credit control.
What Is Credit Control?
By improving the management of your business’ debtor book, you can quickly release more cash into your business from your customers who you are expecting payments from. Having the cash to make your own payments on time will also improve the relationship that your business has with its suppliers. By simply keeping an eye on payments and your debtor book, your business can run much more smoothly.
Of course, it does require a fair bit of skill and professionalism to keep credit in check within your business. Remember that credit control is not just about collecting payments from customers who are late on their invoices, or sending out emails reminding customers of late payments. It’s about building a good enough relationship that they feel comfortable informing you when you can expect a payment if it’s going to be late.
Helping Customers With Late Payments
Calling customers to chase up late payments can be difficult conversations to have. These calls can become emotional, depending on the situation the customer has found themselves in, financially. In these cases, it’s best to remain polite, professional, and try to come to an agreement about payment options.
Before a late payment comes about, your business should try to establish a link with its customers. A line of semi-frequent contact to ensure that everything is going well, particularly nearer the time of a due payment can save a lot of hassle.
Credit control is all about assessing customers that could potentially cause payment issues. From day one, before a sale is even made, your business should be attempting to establish whether or not a customer would be able to make the payments they need to make within your given timeframe. Give your potential customers all of the information they would require to make sure that payments can be made. In addition, one of the other main issues that causes late payments is incorrect invoices. Talk to your customers to gain better insight into their processes and approval systems so that they can receive an invoice that will be approved right away.
What Are The Benefits Of Credit Control?
Credit control has many benefits. A sensible process will help your business save time and save money, while reducing the amount of admin that your company needs to do. When payments arrive in your accounts faster, your business will have more funds, which will allow you to grow. You’ll also avoid your own late fees to suppliers when you’re waiting on payments that limit your spending.
All of that might sound a bit complicated, but it doesn’t have to be. At Cove Accountancy Services, we can support you through putting credit control processes in place, helping you manage your finances and even taking some of that burden away where we can. With our help, you can achieve a much more efficient credit control process and significantly reduce the number of late payments coming into your business. If you would like to know more, just get in touch with us today.