The term ‘credit management’ is often associated with the final stages of the process when a client receives their invoice and payment is pursued. However, truly effective credit management should commence from the beginning of any prospective client relationship.
So, how can your business enhance its credit management function?
Credit Checks
Before entering into any agreements or signing contracts, conducting a company credit check is highly recommended. In contrast, this doesn’t guarantee they will always pay you on time. It helps identify any previous issues with supplier payments (e.g., CCJs).
Know and Communicate Your Terms
Ensure your clients are aware of and capable of meeting your credit terms, whether they are 30 days from the invoice date, 60 days, or even payment upon receipt of the invoice (before work begins), before the business relationship starts.
Ensure Accurate Invoicing
Inaccurate invoicing is one of the most common reasons for late payments. Whether it’s the agreed-upon cost, the correct company name, the accurate recipient email, or your bank details, make sure every detail on the invoice is precise and transparent.
Prompt Follow-Up
Once an invoice has been sent and is due, it’s essential to chase for payment promptly. Your credit control team should be highly trained in customer service. They play a vital role in working effectively with clients to encourage timely payments in the future.
Seek Expert Support
Business owners often have many responsibilities, and credit management can sometimes fall down the list of priorities. To address this, consider bringing in expert support from a third party, whether for invoicing or credit control. They are experienced in effective credit management and free up your time to focus on other critical aspects of the business.
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