Are You In Control? Credit Control That Is

In business, there are a lot of things you can’t control.

What the weather will do on the day you have jobs booked, when your clients will reply to your

messages, or what new suppliers might charge you this week!

But, one of the key things that can feel out of your control is when you will get paid.

Fortunately, credit control can help you overcome this.

Establishing good credit control habits will help ensure you get what you’re owed, sooner.

So, how do you do this? Let’s find out!

What Is Credit Control?

Credit control = getting the money you’re owed.

Ideally, you want to keep the time short between supplying a customer and getting paid. Your

customer owes you, so you’re extending them credit – but you’re trying to do it in a controlled way.

It’s a balancing act!

Cash is crucial to your business. You need to be in control of it, be effective and find ways to help

your customers pay you. Not many small businesses have credit control procedures when they first

start. They just issue invoices and hope for the best. But a large proportion of invoices aren’t paid on

time and, before long, that takes its toll. Cashflow can become an issue, and chasing payments is a

pain.

Make A Plan, Get paid

So, how can you make sure you get paid on time? Well, the first step is to write down some formal

processes that explain how you’ll issue invoices, and what you’ll do if they go past due.

Communicate these to your team, stick with the plan, and you’ll be on your way to better cashflow.

Once you’ve got your plan in place, ensure you’re following these steps to be the most effective you

can be when it comes to being paid.

Set Your Terms

Every business will have payment terms, so it’s time to set out yours. Spell out how long they’ve got

to pay you and identify any late fees. Put these in a condition of sale document and get your

customer to sign it (physically or digitally) before you start doing business.

Invoice Right

Customers can be tricky and require invoices to be “just so” before they will process payment. So,

ask new customers:

● who do I talk to about invoices getting paid?

● what information has to go on the invoice for it to get paid?

● when do you do payment runs?

Get everything they require on your invoices from the start, and you’ll bypass entirely avoidable

admin delays.

Invoice Now!

Delivered your product or service? Hit a milestone in a project? Booked a job and need to take a

deposit? It’s time to invoice, immediately – it’s when your customer is feeling the most goodwill and

will be most receptive to paying. Pro tip: customers can’t pay what they haven’t been invoiced!

Are They Late? Remind, Remind, Remind

Late payment isn’t uncommon – but you don’t have to accept it. Review outstanding invoices

regularly. Highlight the ones that are the furthest overdue, and the ones that are worth the most.

Talk to the customer that owes you: could different payment methods help? For next time, consider

early-payment incentives or different credit terms.

Pick Up The Phone

Are they still late paying you? You’ll likely be able to sort this out via gently, friendly email chasing.

But if that doesn’t work, call them. Customers find it harder to justify late payments when they’re

actually speaking to you on the phone.

Bonus: this can also be a great opportunity to sort out any other issues in a quick, direct way.

Use A Digital Tool To Chase What You’re Owed

Here at CornerStone Bookkeeping, we’re Xero specialists – we reckon it’s simply the best accounting

software solution for small- to medium-sized businesses. And it can even help businesses establish

better credit control. Did you know that Xero has built in features to help you with credit control?

Xero can help you:

● Automatically generate and send recurring invoices on set dates

● Automate invoice chasing by sending email reminders for late payments

● Get paid faster with various payment options (like bank transfer and credit cards)

● Reduce days sales outstanding

● Maintain great customer relationships

Talk to us at CornerStone about your Xero setup today – it’ll help you establish a better level of credit control in your daily business.