There is no question that credit control is a critical part of any business. The best credit control teams are able to keep debt levels low and protect the company’s bottom line.
So, what separates the best from the rest?
In this blog post, we will discuss eight things that the best credit control teams do. If your team can emulate these practices, you will be well on your way to becoming one of the top players in your field!
Create a credit control policy all team members follow
Having an effective credit control policy is the first step to success. This document should outline the procedures and processes that your team will follow. It should be clear, concise, and easy to understand. All team members should be familiar with the policy and be able to follow it correctly.
Obviously, your credit control process will be unique to your business. However, there are some essential elements that all policies should include:
A clear definition of what credit control is and its purpose within the business
- The team’s roles and responsibilities
- The company’s Credit Policy, including credit limits, payment terms, etc
- The process for approving new credit applications
- The process for chasing outstanding payments
- The escalation procedure for when payments become overdue
- The consequences of non-payment
By having a clear and concise policy in place, you can ensure that your team is working effectively and efficiently. Furthermore, it will help to avoid any misunderstandings or confusion amongst team members.
Creating your own credit control policy can be a daunting task, so we’ve put together a handy template that you can use as a starting point.
Once you have your policy in place, it’s important to communicate it to all relevant parties. This includes your team members, as well as your clients and customers. By doing so, you can avoid any potential misunderstandings or issues further down the line.
When it comes to credit control, effective communication is key. This means keeping your team members up to date with any changes or developments, as well as keeping your clients and customers informed of payment deadlines and terms.
When it comes to credit control, effective communication is key.
Sending before due emails to their customers reminding them of upcoming due dates
The best credit control teams are proactive, not reactive. This means they take action to avoid problems, rather than waiting for problems to occur. For example, they may send before due emails to their customers reminding them of upcoming due dates.
Taking this proactive step not only avoids late payments but also builds trust and strengthens relationships with customers.
By letting the customer know in advance that their payment is due, they are more likely to make the payment on time.
These forwarding emails are also an excellent chance to include pertinent payment details, such as account numbers and amounts owed. Attaching a copy of the invoice is also a good idea.
This allows the customer to have all the information they need to make a payment, without having to contact the company for assistance.
Finally, it's always a good idea to ask your customer to confirm if they have received the invoice and when you can expect payment.
This not only helps to ensure that the customer has received the invoice, but it also gives them a timeline for payment.
Solve any queries and issues with the invoice before the invoice due date
Another of the benefits of being proactive is the chance to settle any issues before the invoice is due.
This way, there are no outstanding issues when the customer goes to make a payment. As part of reaching out to the customer in advance, you can ask if there are any queries or issues with the invoice.
This gives you time to clear up any confusion and avoid delays in payment.
If there are any queries or problems with the invoice, be sure to contact the customer and resolve them as soon as possible.
Some of the more common queries and issues include:
1. Incorrect or outdated contact details - If the customer's contact details are incorrect or outdated, they may not receive invoices or other important communications from you.
Be sure to update your records as soon as you have new or updated information.
2. Mismatched purchase orders - If the customer believes the invoice does not match the original purchase order, they may delay payment until the issue is resolved.
3. Unclear invoices - If the customer finds the invoice difficult to understand, they may delay payment until they can get clarification.
Be sure to make your invoices clear and concise, using language that your customers will understand.
4. Unexpected charges - If the customer is surprised by a charge on their invoice, they may delay payment until they can get clarification.
Be sure to keep your invoices consistent and avoid adding any unexpected charges.
5. Duplicate invoices - If the customer receives multiple invoices for the same purchase, they may delay payment until the issue is resolved.
Ensure you send only one invoice per purchase and keep track of your invoices to avoid any duplicates.
6. Missing documentation - If the customer does not have all the documentation they need to process their invoice, they may delay payment.
Include all the necessary documentation with your invoices and follow up if you are missing any information.
7. Outstanding credits or refunds owed - If the customer has an outstanding credit or refund, they may delay payment until the issue is resolved.
Keep track of any credits or refunds owed and follow up with the customer to resolve the issue.
8. Query about the goods or services supplied - If the customer has a query about the goods or services supplied, they may delay payment until the issue is resolved.
Be sure to have a system in place for recording and tracking customer queries and issues. This will help you to resolve them quickly and efficiently.
It will also help you to identify any patterns or areas where there may be potential problems.
Make it as easy as possible for their clients to make payment
The easier you make it for your clients to pay, the more likely they are to do so promptly.
There are a number of ways you can make it easier for your clients to pay, such as offering multiple payment methods, setting up direct debits or providing an online portal.
With Chaser's Payment Portals, you can give your clients the option to pay by credit card, bank transfer, Stripe or PayPal, all in one place.
Additionally, having all the required information to hand will make the process quicker and smoother for both you and your client.
This includes things like invoices, payment terms, contact details etc.
Monitor their customers’ payment behaviour to best tailor their credit control process for different types of customers
Understanding which of your clients are likely to pay on time, and which ones might need a little more coaxing, is vital for an effective credit control process.
This way you can focus your energy on the clients who are more likely to cause issues further down the line.
In order to do this effectively, you need the right data and tools at your disposal. This allows your credit control team to best tailor their credit control process for different types of customers.
With Chaser's Insights Reports, you can see a clear overview of your customer's payment behaviour, so you can make well-informed decisions about which customers to chase and when.
This is just one of the many ways that Chaser can help you get paid faster and streamline your credit control process.
By providing the key statistics related to chasing performance, days to pay and dispute rates, you can be sure that your credit control team is on the right track.
Credit check exciting customers on a regular basis
Most companies credit check new customers during the onboarding process, but it's also important to credit check your existing customers on a regular basis.
This will help you to identify any changes in their financial situation and assess whether they are still a good risk. Regular credit checking will also help you to identify any potential fraudsters by spotting any unusual patterns in their payment behaviour.
If you use Chaser, you can automate this process by setting up recurring credit checks, so you can be sure that your customer data is always up-to-date.
Chaser's in-build credit checking tool provides an accurate credit score to each customer, so you can be sure that you're getting relevant and up-to-date information.
They have ongoing communication with the other departments in their business
A lack of communication between departments and the siloing of information can represent a huge barrier to getting paid on time.
The best credit control teams have regular communication with other departments - such as sales, customer service and accounts receivable - to ensure that everyone is aware of any changes that could impact payment.
They are constantly looking for ways to improve their processes by cooperating with other departments to find new ways of doing things, or it could simply mean constantly evaluating and tweaking their own procedures.
In particular, working in close concert with the sales team can be a huge help in getting invoices paid on time by ensuring that the correct information is passed on from the outset.
Utilise technology and automate where possible so they can spend time on building great customer relationships
Effective credit control teams make use of technology, automating where possible to speed up processes and improve efficiency.
This might include using a customer relationship management (CRM) system to keep track of payments, or setting up automatic reminders for customers who are approaching their payment terms.
Some of the best credit control teams also utilise data analytics to identify trends and issues early on, so that they can take action to prevent them from becoming problems.
This allows them to be proactive instead of reactive when it comes to managing customer accounts.
One of the main roadblocks to effective credit control is the time and cost associated with manual processes.
By automating as much as possible, teams can free up time to focus on other tasks, such as building relationships with customers.
With Chaser's credit control automation software, you can get started quickly and easily, without needing to make any changes to your existing systems.
Chaser integrates with Xero, QuickBooks Online, FreeAgent and many more, so you can get started right away.
Through the use of automated payment reminders and customer communication, you can take a proactive approach to debt collection and achieve better results in a shorter time frame.
Chaser's software also includes powerful tools for managing customer disputes and payments, so you can get paid faster and reduce write-offs.
If you're not using automation in your credit control process, you're likely missing out on efficiency gains that could save you time and money.
If you're looking for a way to improve your credit control process, Chaser is the answer.
Learning from the best
Ultimately, the best credit control teams are those that are proactive, efficient and always looking for ways to improve. If your team isn't ticking all of these boxes, it might be time to make some changes.
By combining the tips above with Chaser's range of automation features, you can turn your credit control process into a well-oiled machine.
To find out how Chaser can help you streamline your credit control, book a demo today or start your 14-day free trial.
