An essential process to be in control of for any business owner is your credit control. A robust credit control procedure can help you get paid faster, and being able to promote timely payments can prevent debt collection proceedings. But how do you begin to build your own strong credit control process?

Credit control is a way to make it more attractive to complete a purchase for your customers, by offering enticing payment terms and making it easier for your customers to buy your products or services. This can in turn result in increased sales for you and your business.

A key part of a strong credit control procedure is determining which customers you can reliably extend credit to. It’s important to keep in mind that extending any credit to customers with a poor credit history can lead to not receiving payment for the products they purchase.

Your robust credit control process helps you ensure your terms and conditions for payments are respected. You must make sure to cover the basic steps:

• Collect Detailed Customer Information - This will help you with recollecting any debts later down the road, and makes getting in contact with your customers easier. You will want to collect at minimum: legal customer names, recent and correct addresses, and the name of the person to send invoices to.
• Run Credit Checks - Once you have collected detailed information about who your customer is, you can begin to run credit checks on their finance history, and repayment reputation. There are many online services which can help you along the way.
• Establish Credit Limits - A vital part of your credit control process is to mitigate risk. Determine the maximum outstanding amount for each customer and consider whether they pay on time.
• Regular Credit Control Reviews - Holding regular reviews of outstanding and pending credits can help you decide which customers need a follow up, if at all. You should look in depth into why there’s any outstanding credit repayments, and request further information from the customer if necessary.

Your credit control policies should be formally written, to make sure you have an established and official way to follow the procedure to ensure the steps are robust, repeatable and work well.
Knowing when to step up from your credit control procedure is important. It can free up your time and can help completely protect your cash flow. Moving from your internal credit control procedure to using a debt collection agency can be worrisome for all parties, however a reliable agency will be able to protect your reputation while providing excellent service levels and maintaining customer relationships.

If you have any outstanding debts you would like collecting or you are interested in using our debtor tracing service, get in touch with our team at K2 Collections to find out more about how we can help you.