This archive report was first published on 17 July 2020.
Embracing the Uncomfortable Truth About Credit Control ¶
As a business owner, one of the most daunting tasks you'll face is credit control. It's a crucial aspect of ensuring your business survives, but it's often shrouded in uncertainty and discomfort. In this article, we'll delve into six essential points that will help you navigate the complex world of credit control.
Published on July 17, 2020
It's Not Personal ¶
One of the most significant challenges new business owners face is the emotional toll of chasing debts. It's easy to feel like you're being too hard-headed or greedy, but the truth is, credit control is purely about business. You've provided a service or product, and the money is rightfully yours. Remember that you're simply asking for what's owed to you, and that's not a personal attack.
It Starts at the Start ¶
Many business owners make the mistake of thinking credit control begins when an invoice is due. However, it's essential to establish clear terms and conditions from the outset. Send a contract or terms and conditions to your customers, and make sure you have a clear understanding of their payment obligations. This will help prevent disputes and ensure a smoother credit control process.
Organisation Wins Every Time ¶
Debtors can spot a well-organised credit controller from a mile off. To increase your chances of getting paid, get your forms and procedures in order, and establish a clear system for chasing debts. This includes sending a first chase letter, a second chase letter, and a letter before action. Make sure you keep detailed records of all interactions with debtors, as these will be invaluable in any future disputes.
There's Always a Story ¶
Debtors often come up with creative excuses for not paying their debts. Don't fall for these stories, and instead, focus on getting a firm commitment from the debtor. If they're unable to pay, work out a plan with them, and make sure you have a clear understanding of their payment obligations. Remember to keep detailed records of all interactions, as these will be crucial in any future disputes.
Give Them Easy Methods of Payment ¶
One of the simplest ways to increase payment rates is to provide easy methods of payment. Consider offering payment options like phone payments or online transactions. This will make it easier for debtors to pay their debts, reducing the likelihood of disputes and increasing your chances of getting paid.
Customers Who Don't Pay Their Debts Aren't Customers ¶
It's essential to remember that customers who don't pay their debts aren't truly customers. They're essentially freeloading off your business, and it's not worth the time and expense of chasing them. If you find yourself constantly chasing a customer, it may be time to reevaluate the relationship and consider cutting ties.
