What is Credit Control?
Before understanding the key techniques for implementing credit control, you must clearly understand what credit control means. Credit control is a practice adopted by money lenders like banks and businesses to ensure that borrowers are likely to repay it back in time. This is a process that comes into play after a sale is made. You might allow your customers and borrowers some time within which they must pay back the amount they owe. Likewise, if the allowed period exceeds, you might have to remind them frequently and catch up with the developments. Most importantly, you must be careful about your own bills and debts so that you don’t run short of money while allowing customers payback time.
5 Tips for Implementing Credit Control Process
Now that we have learned what the major objective of implementing credit control is, let us learn some of the tips to make it efficient. You must consider the following five tips while implementing credit control.
Maintain Sound Relationship With Your Debtors
One of the major tips in implementing credit control is to maintain a sound relationship with your debtors. A relationship with a higher level of trust is a win-win for both lenders and borrowers. A well-trusted client will better understand your needs and difficulties, and hence they are likely to repay on time. Similarly, you must understand their difficulties if they are in trouble, and there is a delay in payment for a few days. Furthermore, with solid trust, you can build a long partnership and conduct business for years to come.
To maintain this level of trust, you must employ a sales team that is well-experienced and open to listen to your customers. You must understand that they represent the tone and voice of your company. Similarly, you must frequently reward them and recognize their dedication to your company.
Quick Invoices and Bookkeeping
This is one of the primary tips for implementing credit control effectively. Your debtors are likely to start the payment process upon receiving the invoices. Likewise, you must state the payment information very clearly so that there is no time waste on further clarifications and discussions.
To generate and send out invoices quickly, automation technologies can be your best bet. Modern businesses are equipped with state-of-the-art technologies that assist in procurement, invoice management, and payments. With electronic invoicing, you can create and send invoices to your customers in a few minutes. Furthermore, this software can track the progress in payments and send timely reminders. A growing number of businesses are adopting these technologies. Thus, you must make sure you don’t get left behind.
Clarify Your Terms and Conditions
Make sure your terms and conditions are very clear and simple so that your debtors understand them. The terms and conditions should contain the allowed period for paying back and the necessary procedures when they fail to do so. There may be the inclusion of fines or legal actions for breaking the terms. Most importantly, the terms should be designed in such a way that it is a win-win for both parties.
Furthermore, it is equally important that you follow up on whether the other party is acting as per the stated terms. Sending out timely reminders will send a clear message that you take them seriously. Moreover, you must be flexible and understanding when the other party goes into serious troubles. This will preserve your relationship and increase your business.
Accept Wide Range of Payment Options
Today, there are several payment options available for Business to Business (B2B) and Business to Customer (B2C) ecosystems. Likewise, they are increasing in practice because of safety and convenience. With digital payments, transactions happen in seconds. Furthermore, they are backed by global standard security measures that protect your privacy and critical information.
If you have a business website, make sure they are facilitated with payment gateways to accept cards and digital payments. Similarly, these payment methods can be integrated with other technologies like Customer Relationship Management (CRM), accounting and inventory management, and digital marketing. You can automate receiving payments and updating your books simultaneously.
Filter Out Bad Debtors
Even if you follow all the necessary tips for implementing credit control, there will still be some bad debtors. If you think your customers have been very careless paying you back multiple times, it is better to move on. You will save both money and time, and you can focus on your best customers.
To spot early warning signs, be sure to check their websites and read the reviews. Likewise, check if they respond timely to your reminders and warnings. In this way, you can prepare your terms and conditions to prevent bad debts or walk away in time.
How Can We Help?
From this blog, we have learned the major tips in implementing credit control to avoid delayed payments and bad debts.
3E Accounting can provide state-of-the-art Hong Kong accounting services to help your company maintain an effective bookkeeping process. Our unparalleled expertise and decades of experience allow us to understand the impact of good accounting practices on the growth of businesses.
Even though our services are top-quality, they are still very affordable. Moreover, our guaranteed satisfaction is backed by thousands of our customers worldwide.
Contact us at +852 5749 4859 or email at firstname.lastname@example.org for more information.