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Credit Control Basics |
Credit 'Control' is just that: controlling your company's credit. When you no longer control your debtors the cost of financing your company's cash flow is at the mercy of those very same debtors. There are three elements to good control: a) System b) Procedure c) Staff New Account Credit System
Input/Set-up Customers Details Correctly
Raise & Post Welcome Letter and Terms & Conditions
Goods Delivered/Service Provided
Invoice Paid
2nd Order Received
Credit Approval
Invoice Raised, Sent to Customer
Invoice Paid
However your system works, the important factor is that you have a system: everyone easily understands and uses:
that it is a workable system
that you can easily find out at what stage a sale is within that system:
the system is capable of accepting or rejecting a sale, with a reason provided
Credit Procedure Each of the area's in your system needs a specific and detailed 'step by step' written account of how to receive, initiate, produce, control, and forward any given task to ensure the optimum operating system. Preferably in the form of a company procedure manual.
By implementing a credit control procedure manual you are enforcing your company's individual characteristics. You are showing you have management and company values that will inform your customers that you have presence, confidence, diligence, and that you are prepared. Companies that have these values are less likely to suffer from late payment or bad debt ( aged debts). Ongoing Credit System Whether your sales ledger is computer based or manual, a clear and simple system and procedure is required to:
receive orders
confirm credit status
raise invoices/credit & debit notes
receive payment
identify/resolve queries
identify & measure deficient accounts
produce & follow-up default remedies
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