Neglecting Credit Control Duties Can Seriously Damage Your Business
It is most important you do not allow late paying customers to damage your business. Late payers will at the very best, damage your profits, at the worst they could cause your business to ultimately fail.
Installing adequate systems is an essential requirement, and will reduce the risk of customers not paying in good time.
Make certain that your invoices are correct; clearly show when the amount is due, and how best payment can be made. Giving customers several alternative methods of paying is a good idea. Anything that speeds up payment is to be encouraged.
Where you trade with businesses on credit terms there are ways available to you to speed up incoming cash, and protect you against bad debts. Carrying out a comprehensive credit check is the first requirement. Factoring and Credit Insurance may be suitable for you too, but beware, these services can be expensive. Make sure you build these costs into your overhead projections at the outset.
Lack of ready cash is one of the prime reasons why many businesses go bust. It is perfectly possible that your business is making money, but if you can’t pay your bills when they become due, you could run into serious difficulties, not to mention the associated stress that always comes with it.
Accurate and effective cashflow management will keep your organisation out of the red, and will ensure that you can pay your suppliers on time. That will build up substantial goodwill and may in time, allow you to negotiate a better deal when next purchasing.
It is a good idea to check your own credit rating. There may be little things listed that you were unaware of. There may be glaring inaccuracies that can easily be put right. If you have a poor credit rating you may be paying more for your supplies than is necessary. If you detect any inaccuracies ask the credit reporting companies to put them right immediately.
No matter what you do, there will be occasions when your customers don’t pay. You must never ignore it. Keep calm, act decisively and resolve problems with the minimum of fuss. Remember, you do not want to be spending any more time on these issues than you need. A speedy resolution must be your ultimate aim.
Always monitor your invoices and note as soon as they become due for payment. Ask one of your staff to ring the client, preferably someone who does not normally talk and sell to that buyer, and politely point out, they are due for payment. If they do not pay, stop supplying the customer with any further goods. Yes, you might annoy them, but an annoyed customer is far preferable to one who doesn’t pay ever increasing bills.
The time to install systems and methods to deal with late and non payment is when you start your business, not months down the line when you begin to run out of ready cash.
Remember the old maxim. Cash is king. In business, it’s as true today as it ever was. Neglecting credit control duties sooner or later will seriously damage your business. Never allow other individuals and organisations to harm your business in this way.
