Imagine this: you have just taken on a client and you are really excited to be working with them. You build up a great relationship - you even know their children’s birthdays. You complete the work and invoice them. They avoid you like the plague.
This situation is a common problem for most businesses and frankly, it causes the most stress. Nobody likes to address bad debtors but avoiding the problem is not going to help your business. In fact, the wrong bad debtor could bring a swift end to your company.
That’s where Credit Control comes in…
What is Credit Control?
There are two parts to Credit Control.
Credit Control is a process by which you deem who is a good or bad risk. For instance, you may have client who you deem a good risk and you feel comfortable offering them payment terms of 30 days, then there may be a client who you’ll insist makes the payment upfront due to previous late payments. Credit control is managing this process to give the right customers the right amount of credit.
Ultimately, you want to minimise the risk of bad debts.
After you have assessed them and deemed them a worthy credit risk, they still may not pay you after you have done the work. You have a process to follow which will help you retrieve that money.
Tidy Numbers can help you with both aspects.
Reduce your business risk in three steps
There are three main things that you can do to reduce the risk to your business:
- Obtain written Terms and Conditions which the customer has to agree to before work commences – by having Terms and Conditions you dramatically reduce the risk. It shows you are a serious business not to be messed around. The Terms and Conditions are there to make sure you get paid and if not, what happens to that customer if they do not pay. E.g. late payments.
- Obtain their agreement in writing – oral agreements are enforceable but it makes it a lot harder if things go to court.
- Invoice them promptly – reduce the potential amount of time you could be waiting for payment.
How can Tidy Numbers help?
We want to take the stress away from you. It can be hard to determine credit risk and it becomes even more difficult when they don’t pay.
A few ways we can help:
- Advise on a good Credit Control procedure.
- Implement and Assist on your Credit Control Procedure.
- Contact your debtors on your behalf to retrieve payment.
- Instruct a collection agency/ solicitor on your behalf.
- Provide a monthly report on potential debtor problems.
- Advise on Terms and Conditions.