//Effective Credit Control – Top 5 Stumbling Blocks

 

  1. Evasive Directors

Most people in positions of responsibility in a business are busy people but it can be quite surprising how the people in charge of paying the bills can suddenly become unavailable when a payment is due.

At MCC we have encountered all manner of reasons why we can’t speak to the bill payer from “the phones are down at the moment” to “they’re on holiday at present” or just plain and simple “they’re not at their desk at the moment shall I get them to call you back?” of course the call rarely comes through.

In cases such as these it is important to be persistent in trying to get through as eventually someone will speak to you.

It is rare that the person in charge of paying invoices will go away on holiday without making some sort of provision whilst they were away.

It is important to remain calm and polite throughout the process whilst still being able to stress the importance of the invoice being paid and your relationship with the business.

  1. Invoices Disappearing

Companies can use the above as a delaying tactic when it comes to paying so it pays to be aware and to put some procedures in place to stop it happening. There is nothing more infuriating than an invoice not being paid on time and when chased the other company say they haven’t received it and ask for a copy one to be sent thus delaying the payment further.

A good way of preventing this is to call customers to ensure that the invoice has been received, that there are no queries on it and that it has been entered onto their system successfully thus ensuring prompt payment.

It is vital to make sure that credit terms and payment date are included on your invoice in a prominent position for the customer to see. This will further reduce the chances of a customer missing a payment date.

This system also gives the opportunity to deal with any queries or problems quickly and efficiently whilst still being paid on time.

  1. Cheques getting lost in the post

Some companies still pay invoices by cheque and this can offer the perfect opportunity to stall payment by claiming that the cheque has been sent and must have been lost in the post.

If this occurs then you can check to see if they have the correct address to send the cheque to. You could then also ask for the cheque number and the date they posted it. This can sometimes reveal that they haven’t actually sent the cheque at all and you can then offer a different method of payment.

Even if the cheque arrives on time there is still the time it takes for the cheque to clear where the money is sitting in their account and not yours.

It may well be worth considering not accepting cheques at all and taking payments via BACS.

  1. Sales Team Accepting Bad Orders

Some sales team members can be too quick to accept orders without looking at the company who is placing the order especially if they need to meet a target or earn commission. This could lead to taking an order from a company who is a regular poor payer without putting any safeguards in place.

To reduce the chance of the sales team taking bad orders it would be better to incentivise them once the invoice has been paid rather than when the order is placed thus ensuring that staff are fully focussed on those likely to pay.

  1. The Day Is Too Short

Small businesses who don’t have a dedicated credit control facility can be particularly prone to finding that there aren’t enough hours in the day as they try to do everything themselves. The focus generally seems to be on getting business in and the actual collecting of the payment gets done as and when. The payment is equally as important as getting the business in and late payments can lead to longer hours spent chasing invoices, an interruption of cash flow and worse, the folding of the company.

Outsourcing the credit control function can free up more time for small businesses to generate new business, ensure smooth payment and a healthy cash flow cycle.

2017-11-15T06:21:42+00:00

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