Credit control is exactly that; the control of the credit you offer a customer and the managing of it. Just like landscape, the foundations stay the same but the landscape can change considerably.
The foundations are broken down into four key areas:
- Pre sale
- Post sale
- Past due date
- The ongoing account management
Over the past decade alone, we have seen more digital and automated products offering chasing by text, emails, auto dialling for volume calls and standardised letters which in the right business model work well.
Equally it may also be said that the core skill of a good credit controller has been diluted by this process. Credit control is not a one size fits all function. Problems will always arise where a lack of skills exist and also a lack of flexibility in the process.
There is a shift towards more bespoke credit control in respect of the information and terms offered to a customer. There is little point insisting on your terms of seven days if in reality they are working on a 30 day cashflow. Some will argue that blanket terms such as xxx days from date of invoice will see a higher debt turn and more overdue invoices simply due to the fact that where repeat invoicing exists most customers will pay net monthly.
By getting the pre sale and post sale areas right, offering a realistic credit limit and terms means you can maximise profitability and reduce risk.
Remember unless you manage the account correctly you cannot simply stop supply or indeed demand a payment when a limit is hit unless it is covered within the terms that you are working to.
Perhaps more importantly consider the fact that marketing and sales should work in harmony with credit control. A marketing drive will result in an increased volume of work for the operational and back office including credit control.
The saying “A sale is not a sale until paid for” should be embedded in the culture. If your business struggles to implement this then a reputable credit management company such as ICM can help.
Fusion with technology and bespoke process alongside good old fashioned human interaction will bring results.
