Credit control 

Good Credit control is about managing one’s outstanding accounts (debtors) to maximise your cash flow while at the same time retaining your clients. You can’t pay your suppliers unless you get paid or you have a very accommodating bank manager. Remember "a sale is not a sale until it is paid for" is as true today as it was 30 years ago.

There are a number of good business practices that can be used to collect your money faster:

• Post invoices promptly, don’t wait until the end of the month as a lot of customers pay on invoice.

• Send out statements as soon as possible after the end of the month. Statements need to be in the mail by the 3rd working day at the latest.

• Put a due date on your invoices: "This account is due for payment on (date, e.g. 20/6/2010)." Not "This invoice is due for payment on the 20th of the month following the month of invoice".

• Use statement stickers or hand written post-it notes on overdue accounts.

• Look to start charging interest on overdue accounts.

• Don’t invoice until the supply or service is complete (i.e. don’t send out the invoice 3 days before the job is finished). Only invoice when the job has been FINISHED.

• Regularly telephone overdue accounts 4-7 days after due date, don’t leave until the next month.

• Check new clients on the Companies Office website, phone around to see who has been dealing with them previously, build up a network of contacts to check out new clients.

• Only give credit to credit worthy clients. Obtain a credit report on new clients and learn how to read these reports.

• Work out how you are going to deal with "special clients" (e.g. those that buy large, get the biggest discounts, never pay on time and usually make the most noise).

• Belong to trade groups and listen to the problems that your competitors are having and learn the lessons.

These are all common sense Credit control rules that you can put into practice.

Credit Control is not hard but many sales people and managers/owners are afraid they will upset clients by asking for your money to be paid. While it is true that nothing happens until someone sells something, it is also true that accounts must be paid on time for the business to function effectively.

For more information please click on the link to the Self Help page

If you do nothing else at all, remember "The Golden Rules of Credit"...

• Know who you are dealing with (Are you dealing with an individual, trust, partnership or company?)
• The squeaky wheel gets the oil (If you don’t make a noise you won’t get paid.)
• A leopard never changes its spots (A bad credit risk is always a bad credit risk.)
• The best indicator of what a man or woman will do tomorrow is what he or she did yesterday. 

Remember, knowing 'how' to do it and 'doing it' are two very different things.

For Credit Control Christchurch, Credit Control Wellington and Credit Control Auckland, call us on 03 355 6291