InsightsInsight - Debt Recovery - POSTED: October 18 2016
Effective credit control
In the uncertain world in which we currently live it is now more important than ever for businesses to keep a close eye on income revenue.
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With the full effect of Brexit yet to be felt, (be it positive or negative) businesses should look to their credit control policies and procedures to safeguard their cash flow in case of an economic downturn. Although you may have the best sales figures in your sector, these will count for nothing if sales are not transferred into cash.
Credit control starts from the moment that an item is sold and an invoice raised. To assist your business in the collection process you should consider including in your contracts and terms and conditions of sale, such items as:
- Strict payment terms
- As much information as possible regarding your client (i.e. phone number, address, email address); if you need to attempt to recover the outstanding invoice then knowledge is power
- Following on from point 2 above, make sure all salespeople are fully briefed as to what is expected of them in obtaining information from the client
- The addition of interest to invoices which have been paid late
- The ability to recover legal costs
Should the invoices remain unpaid after the payment term then you need to consider implementing a strict procedure, such as:
- Send an email or text reminder a few days before the invoice is due for payment
- The day after payment is due to send a further email or text to state the invoice is due and interest will now accrue
- 4-5 days after point 2, make a phone call to the customer to establish if there is any difficulty with payment of the invoice (be it a dispute or an inability to pay at once).
- 7 days thereafter send a formal letter attaching a copy of the invoice
- 4-5 days thereafter attempting a second phone call to the debtor
- 7 days thereafter send a formal letter of demand
- After a further 7 days then any outstanding accounts to be referred to Brachers for collection
Each credit control procedure can be specifically drafted to fit with your business and of course, you will know the small amount of clients were the procedure should not be used.
We at Brachers not only assist with formal debt recovery procedures through the court process but can also assist with your credit control, from drafting a policy to undertaking the credit control on your behalf. By implementing an effective procedure not only should your business thrive through increased cash flow but your customers should also see that you are a professional business which should reflect positively on you and assist with increased repeat customers.
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