8 Easy Ways To Improved Credit Control

According to recent research, approximately 1 in every 4 businesses will go into insolvency each year, largely as a result of late payment of invoices. Smaller-sized firms can be especially vulnerable to this - estimates show that they can be owed an average of £30,000 at any time. Regardless of the size of your business, you can't afford not to take credit control very seriously, especially when considered in terms of today's economic difficulties. Read on for some handy hints to help you keep your cash flowing.

1. Make your terms clear. Agree payment terms at the order stage and have those terms printed on relevant documents such as invoices. Terms should include any credit period and details of interest charges on overdue accounts. Don't forget all businesses have a legal right to claim interest from late paying customers.


2. Think about having credit checks performed on large prospective customers. An online credit rating can be on your desk in minutes and cost from £10 upwards. Consider taking up credit references.


3. Make your invoice clear. A straightforward invoice that is easy to understand will encourage faster payment from customers - don't forget to include a detailed description of the goods, a reference to the order number and the agreed payment date.


4. Chase outstanding bills ASAP. This is perhaps the most important tip of all. Always concentrate on the largest debts first, customers you guess may be in financial trouble, and older accounts. Keep a log of all your calls - day, time, the name of the person you spoke to, and what you spoke about. Do not be embarrassed about requesting payment - never forget it is your money. Phoning is one of the fastest ways to persuade late payers to pay up, but never call on Monday or Friday.


5. Deal with excuses. Always be skeptical of excuses - they are often tactics employed to buy time. Put these customers high on your chasing list. Have a standard policy on dealing with common excuses such as:

- "I haven't received your invoice". Check the invoice address is correct and immediately e-mail another copy to the person you spoke to and phone to check it has been received and when you can expect payment

- "I'll deal with it shortly". Ask when.

- "The cheque's in the post". Ask for the postal date and cheque number

6. Send 7 day letters. A 7-day letter is the first stage of taking legal action - you cannot sue unless you have sent that person such a letter. You will find that there are some businesses who make it company policy not to pay their invoices until they have received a 7-day letter. Consider appointing a specialist debt recovery solicitor to send 7-day letters on your behalf. Receiving a solicitor's letter often provokes a strong reaction and can therefore lead to a significant improvement in results.


7. It's good to talk. Maintain a positive and personal relationship with your customers. You are more likely to get the results you want if you adopt a friendly approach. Explain that you value their business and have been advised to take legal action but only want to do so if there is no alternative. Speak to the managing director or finance director of the business, or another decision maker if possible.


8. Thank customers who pay on time.


Whatever you do, don't delay. Unpaid bills should be dealt with as quickly as possible. Also make sure you have a written credit control system in place and that you use it. If customers continue in failing to pay invoices, contact an experienced debt recovery solicitor to help you recover your money.