Business Credit Control Tips for 2023
Business Credit Control Tips for 2023
Businesses struggle in general when it comes to maintaining a steady cash flow due to non-paying clients, financial issues etc. A large number of firms had to close following the financial damage that resulted from the pandemic.
Now that 2022 has arrived, business owners across the world are ready to put the last year behind them. Using a new year to implement new or refine existing processes is good practice.
Each year will bring new financial challenges, which is why a company’s credit control strategies should be reviewed annually.
A pragmatic credit control process provides many benefits to organisations of all sizes. It will allow you to be able to manage cash flow more effectively and keep finances in good shape.
They also help to prevent any financial issues from occurring in the first place. Examples of this include outstanding invoices, payment dates being missed and credit terms disputes.
Those without procedures in place may waste a lot of valuable resources when dealing with financial issues. These resources should be used on beneficial tasks such as growing the business.
A credit management team will allow other aspects of the business to thrive and focus on its own roles. This will maximise productivity and create a smooth day-to-day business life.
Should your business experience issues related to accounts payable, you need to take action to ensure you are paid on time.
Getting clients and customers to pay can be challenging but having credit control procedures in place will prevent this struggle.
Our specialists have put together this expert advice to help businesses fully maximise the effectiveness of their credit control measures.
Top 5 Business Credit Control Tips for 2023
No matter the size of your business, it is relatively easy to implement credit control measures into your workflow.
Some are extremely simple but can have a big impact on reducing the amount of cash flow issues you may encounter.
At Federal Management, we have experienced every problem related to finances and know how best to challenge these.
Following our Business Credit Control Tips for 2022 guide will allow you to focus on growing your organisation.
Tip 1: Enhance your credit reporting efforts
Many businesses will have experienced a client that has turned out to be unreliable when the payment due date arrives.
Whilst this is a common scenario, there are ways to reduce the chances of this happening.
Before providing goods or services to a new client, you should always start by credit checking the business in question.
Websites such as Experian and Creditsure are designed to provide an overview of a company and its financial history.
A credit check will indicate whether they are likely to pay for the services that are to be provided.
Actively carrying out credit checks will reduce the number of times that your clients try to get out of paying you.
You can settle any anxiety or stress by offering credit limits to those that you are unsure of.
This should also be commonplace for existing clients as credit files can change in an instance.
Tip 2: Make sure your invoice system is efficient
Invoices are an extremely important document that is responsible for your business getting paid on time.
Sadly, many businesses experience the scenario of unpaid invoices on a regular basis.
If invoices are sent out late, or with incorrect information, this can make it easier for a client to withhold payment.
Making sure that your invoice system is efficient is a good way to enhance your credit control procedures.
If you send invoices with incorrect information, such as wrong names or dates etc, this can be exploited by the client.
Tip 3: Effective terms and conditions
Contracts will provide protection to you and your business should any problems arise. These will outline to the client the various terms and conditions related to the service you are providing.
No client should have a problem with signing terms and conditions, as this is common in everyday business life.
Payment terms can also be implemented into work contracts to make the client know what their payment obligations are.
This will outline when the client is to pay for the goods provided, which is usually 30 days after the invoice date.
It will reduce the chances of the client making excuses for not paying on time as they will have signed the agreement.
Tip 4: Be flexible with the way that clients can pay
As part of your credit control procedures, you should make it easy for your clients to pay for the services you are providing.
The more modern payment options that you implement, the easier it will be for your clients to pay. This will also reduce the number of excuses due to non-flexible payment facilities.
Online forms of payment are most popular in the modern business world with cheques becoming a thing of the past.
Adding your bank details onto your invoices will also make it easier for your client to pay you.
Tip 5: Maintain relationships with your clients
This tip is mentioned in every guide due to its overall importance on the longevity of the business.
Business relationships are extremely important and you should do everything you can to retain them.
Simple and friendly phone calls to your clients can act as a reminder of upcoming payment dates. Routinely engaging with your clients is good practice and will keep a strong relationship.
This is especially true for small businesses that may need to retain clients as to not affect cash flow.
Use A Professional Debt Collection Agency
If you have already implemented the above tactics and are still experiencing non-payment, you need to take action.
Bad debt can cause various issues for businesses and may damage cash flow if left untreated.
The most effective and affordable way to solve any payment issues is by using a professional debt collection agency.
Federal Management is renowned for being the UK’s leading commercial debt collection agency.
Since 2004, we have recovered millions of pounds worth of debts as a result of failed credit control procedures.
We maximise success by providing our clients with an average recovery rate of up to 90% on all undisputed debts.
Do not hesitate to contact our team of experts today if your business is owed money by a client.