Harry's hints

Make Credit Control a Priority

As credit remains tight the importance of maintaining liquidity is critical as banks continue to avoid extending additional facilities and dramatically increase charges and interest charges. For those businesses using a Cashflow finance the discounting fee can represent a huge cost. So make credit control a priority in every management meeting and consider the following tips:

• Can you collect your debts by Direct Debit. If BT can why can’t your business?
  
  
• Get your suppliers to fund your business? This sounds controversial but many businesses have large suppliers who will enter into supply agreements with deferred payment terms
  
  
• Review and renegotiate the cost of any Cashflow Finance. The security of Trade Debtors makes this type of funding more readily available than overdraft or business loans - so shop around. Also considering obtaining separate trade credit insurance from a dedicated provider
  
  
• Identify how long your customers are taking to pay - most accounting systems have standard reports that identify this. Review this report monthly and tackle those customers who are abusing your agreed Terms - or like the banks increase your prices or charge statutory interest
  
  
• Ensure you have an experienced Credit Controller managing the Debtors who has an established procedure. Review the ledger with your Credit Controller weekly
  
  
• Send e-mails and phone your Debtors - stop sending polite letters to remind customers to pay. Record every promise and identify obstacles/objections to payment early
  
  
• Establish a relationship with a reputable Debt-Collection agency working on a no win no fee basis. Often their charges will be recovered in addition to your debt at no cost to you
  
  
• Manage every overdue account