Credit Control, watch it or it gets out of control!!!!

23: Credit Control, watch it or it gets out of control!!!

There’s one thing in life that annoys me more than anything else and that’s when customers who have accounts don’t pay me on time, or within credit terms. Irritates me beyond belief and all it does is holds up the people we have to pay.

Credit control is the most important department in any business. Someone needs to manage that and keep it under a tight control, but here are some simple tips I use to keep that cash flowing.
1: if a company wants credit, check them out using credit check software like CreditFocus, costs £10 per month and you can easily see who you are dealing with.
2: don’t be pushed into giving credit and I know if you’re a new business the temptation is there to win goodwill, but if the money is in the wrong bank account ie not yours, then it’s no good if the cash is not there. Check out who you are dealing with.
3: accept credit cards, do it with your bank, money comes in quicker. If you ask nicely the set up fees should be free, but expect charges of about £500 and transaction fees of about 2%. Whatever happens do not go to a third party credit card clearer, will cost you dearly.
4: paypal offer a cheap solution matched with a smart phone, costs about £100 to set up and they take typically about 5% of the transaction.
5: I take the view if you’ve never heard of the company, charge upfront.
6: if you’ve offered accounts and firms are tardy in paying. Phone them up and ask for payment especially when they are late.
7: for very big sales you need to double check how you will be paid, history is littered with companies that have failed because one big customer didn’t pay. Actually for really big sales, ask for part or full payment in advance.
8: consider factoring or discounting your sales ledger, take advice first, or call me, I’m an expert on this, great for cash flow, charges are incurred, but there’s lots of shysters out there. The principal of factoring brings your sales ledger in very quickly, but take advice first.
9: don’t accept cheques on point of sale, either it’s cash, credit card or authorised accounts.
10: you could offer discounting on settlement of accounts, but manage this or your customers will take advantage and still get long term credit.
Richard Vanbergen. Business Management Associates

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