What is credit control and the importance of getting paid on time.
Credit control is an important part of all businesses in order to avoid cash flow problems and ensure customers pay within your credit terms. Many businesses fail due to poor cash flow caused by payment delays and bad debts mounting up over time. This is where we can help.
What is credit control?
Credit control is when you make sure that your customers pay you on time. When you generate an invoice from your business, you should state clearly the payment terms and the number of days you will allow them to pay your invoices.
Many companies set their payment terms at 7 days, 14 days, 30 days or even 60 days. If your customers take longer to pay you than your payment terms, then you will have to chase them for that payment. This process of chasing is called credit control.
Having a good credit control system in place means that your business will have cash coming in, when you are supposed to, avoiding any cash flow issues.
The benefits of credit of control
As a business, you should aim to have cash coming in to avoid cash flow issues and keep your business cash flow healthy. The benefits of credit control are:
- Credit control saves time
- Credit control saves money
- Your cash flow will improve
- Credit control helps you manage risk
- Good credit control gives you peace of mind
- Good credit control avoids you having to borrow money
How to avoid cash flow problems
Implementing credit control helps reduce some of the risk within your business, helping you to avoid late payments or non-payment and will help you to keep your cash flow healthy allowing you to make longer term investment decisions.
Ways to chase outstanding debts
- You could chase the debt yourself, through email reminders and calling your customers, but this can be very time consuming.
- You could use your accounting software to automatically chase invoices on a set date. You need to make sure this is accurate though and not chase a customer when they have already paid you.
- You could outsource your credit control to someone like ourselves. This will provide a high-quality, cost-effective solution to your credit control issues, if you don’t have time to manage the process yourself. We are professionals at credit control and know the right approach to take and ensure it is chased regularly.
Getting paid on time by your customers and chasing overdue invoices is much easier if you set expectations from the beginning of your business relationship.
If you are struggling with credit control and need help and advice then please get in touch.