Whether you’re a CEO, credit controller or office administrator, we all face the same challenge: there aren’t enough hours in the day to achieve everything we want to.
Business in general is a juggling act. We all have so many responsibilities and tasks that needed to have been actioned yesterday that it’s getting harder and harder to manage our workloads and prioritise the most important bits.
Unfortunately, credit control is one task we literally can’t afford to get wrong in this sense. Certain jobs need to be done at different times, and if they’re not it’s likely to cost the business money. Whether it’s raising an invoice or remembering to call your customer at the right times, it can be difficult to keep on top of everything.
That’s why we’ve come up with nine important credit control tasks you can complete in one hour or less, helping you to realign your priorities to give you back the time we all desperately crave and achieve the best results:
1. Review your sales ledger
This is arguably the most important job for a credit controller. If you don’t know the status of each invoice and customer, it’s almost impossible to take the right action at the right time. Get into the habit of doing this every morning and use it as a tool to plan your day.
Focus on the invoices which have exceeded terms – getting payment from these customers has to be your number one priority as the longer their invoices go unpaid, the more difficult they’ll be to recover.
2. Contact customers whose invoices are overdue
Building on the first tip, spend time contacting each of your customers whose invoices are beyond the due date.
Your approach to these calls should vary – the tone should be much firmer when discussing invoices which have been overdue for a long time, for instance.
Ultimately, the exercise should be used as an opportunity to get the latest on why the invoice hasn’t been paid, reaffirm how important their payment is for your business, resolve any disputes that may exist and explain the steps your business will have to take if payment isn’t received soon.
3. Take action on aged balances
Hopefully the last exercise won’t be too big a task and can be completed within an hour – it depends on how many invoices are overdue! – but if it can’t, it’s important to consider what you can do about it.
The longer you spend on unpaid invoices, the less time you’ll have ensuring other customers don’t follow suit. This is where it can be useful to call on the resource of a specialist debt collection agency, as they’ll take on the burden of recovering payment and use their expertise and weight to secure the money you’re owed quickly.
4. Contact customers approaching due date
Often as a result of too much time being spent on overdue invoices, it is very easy for credit controllers to neglect customers whose invoices are approaching their due dates. Yet calling a customer a few days before payment is due can be one of the most productive exercises for a credit controller.
As well as bumping your invoice to the front of their mind and ensuring it hasn’t been misplaced, it will often encourage them to pay it within terms as they won’t want the awkward conversation the day after it exceeds terms asking where payment is.
It will also help to identify customers who are genuinely going to struggle to meet your due date and allow the company’s cash flow forecast to be adjusted. After all, no-one likes nasty surprises.
5. Credit check long-term customers
Many businesses will have a large proportion of repeat customers who you’ve been supplying for a number of months or even years. But whilst you probably credit checked them when they made their first order, when was the last time you did so?
Unfortunately, today’s choppy waters means the financial position of businesses can change overnight – often through no fault of their own – which could mean they may struggle to pay your next invoice on time or at all.
Take the time therefore to credit check those long-term customers to get a more up-to-date picture of their business. Credit reference agencies have subscription models to maximise value for their clients, whilst it’s also possible to credit check businesses on an ad hoc basis.
6. Review your invoice
When was the last time you reviewed your invoice? Do you offer the most appropriate payment methods for your market, and how clearly are these stated on the invoice? Design is important in a wide range of business aspects, but it can also make a huge difference to encourage prompt payment.
For instance, are your credit terms clearly stated? Can the customer see exactly what they’re being invoiced for? Could you make things even clearer? Take the time to compare your own invoice against others you receive to see if you could try something new.
7. Brush up on your company’s credit policy
If your company does have one, ask yourself how well you know it? If the answer is ‘not very well’, how can you be following it?
Take the time to read back through it and make sure you’re following its steps. Credit policies are there to help you and, when done right, should be based on best practice to improve performance.
It’s also worth making a list of recommendations of ways you think it can be improved based on your day-to-day experiences. It should be an evolving document, after all.
8. Book yourself onto a training course
It’s extremely easy for us all to get set in our ways and tell ourselves that the way we do things is the right way. But when did you last receive some proper credit control training?
Whether it’s a seminar held externally or you get someone in to talk to the whole department, training can be an excellent way of identifying new methods to improve results and put to bed any bad habits you might have gotten into.
Have a quick Google, there are plenty around that could be extremely beneficial!
9. Find online resources
If that’s not possible, perhaps due to budget constraints, there are plenty of useful online resources which are free to download to help you improve your credit control.
Whether it’s a blog post such as this (which we hope you have found useful!) or more comprehensive resources, there’s so much information available to credit controllers. Not all of it will be relevant to you as every business is different, but even if you glean one new tip it could make all the difference to improving your performance and helping your company get paid on time.