Credit Control: The Myths vs. Reality

 

Myth 1: Credit control only matters when a customer doesn’t pay.

Reality: Credit control begins before a sale is made. It includes assessing creditworthiness, setting terms, and proactive monitoring—not just reacting to missed payments.

 

Myth 2: Chasing payments harms customer relationships.

Reality: Polite, professional follow-ups can strengthen relationships. Clear communication and consistency build trust, not resentment.

 

Myth 3: Offering credit always boosts sales.

Reality: Extending credit without proper checks can harm your business. Not all customers qualify for credit—perform due diligence to protect your cash flow.

 

Myth 4: Late payments are just part of doing business.

Reality: You can reduce or eliminate late payments with proper systems: clear terms, automated reminders, and prompt follow-ups make a big difference.

 

Myth 5: Credit control is only the finance team’s job.

Reality: Effective credit control is a company-wide responsibility. Sales, customer service, and leadership should all support credit policies.

 

Myth 6: Automation replaces the need for human oversight.

Reality: Automation is powerful, but it can’t replace human judgment. Credit controllers bring nuance, relationship management, and strategic decision-making.

 

Myth 7: Legal action is the best way to recover debts.

Reality: Legal action is a last resort. Prevention, communication, and negotiation are more cost-effective and preserve business relationships.

 

How do you bust the myths?

In an nutshell the best way is to build a credit policy, screen customers early, and don’t hesitate to act when payments are delayed.