Business Garage continues our weekly #toptips for #bookkeeping series. Week three – credit control.
Credit control is often the least favourite area of many business owners, but is also one of the most important and if done right, can be highly effective.
- Get your invoices out at the earliest opportunity. Invoice in advance if you can.
- Keep a regular eye on your sales ledger for debts due or overdue. Establish a weekly routine.
- Build a positive relationship with customers. Be clear that you have correct invoicing details from the outset and once the invoice has been sent, follow up with a courtesy call to check that it has been received.
- Email a reminder ahead of the due date and ask for confirmation that the invoice is being paid by the due date.
- If the payment due date has passed, call your customers – it is harder to ignore a telephone call, compared to a polite email. Be polite but firm.
- If you are pressed for time, focus on the larger debts first.
- Revisit your processes if you find you are constantly doing credit control:
- Does your invoice template need simplifying?
- Are your terms and conditions clear?
- Are you producing invoices quickly enough?
- Payment methods – BACS is the quickest way to receive cash, have you included your correct bank details on the invoices?
- International payments – have you included IBAN and BIC on your invoice? Ensure that if you are billing in currency, you are able to accept currency payments into your account.
- Be prepared to take action:
- Send out an overdue notice 7 days after the due date
- Send out a final notice 14 days after the due date
- Send out a legal notice 21 days after the due date
- Each letter should give 7 days to respond
- Be prepared to follow through and file a claim.