When you’re busy running a business, it can be challenging to find time to effectively manage your credit control processes. When this is the case, it becomes incredibly easy for aged debt to build up quickly, eventually requiring more effort on your part to rectify it.
As Credit Control experts, our team has put together a list of simple steps to ensure you avoid aged debt build-up as much as possible…
Give clear payment terms and stick to them
One of the most important things you need to do when entering into a commercial relationship with another business is to ensure you’re providing them with clear payment terms that are easy to follow.
Let them know when and how they will need to pay and ensure the information has been understood before any further action occurs. If issues with late payments arise later down the line, you’ll be able to remind them of the payment terms they agreed to, which should encourage payment to be made.
Another vital element of your payment terms is ensuring all your staff members involved with credit control are aware of them and provide the same information to all customers. The last thing you want is your customers being told different things by different people – they may use this as an excuse to get away with late payments. Ensure all staff are up to date on payment terms and encourage them to stick to them.
Check out your customers
You wouldn’t enter into a real-life relationship with someone you know nothing about, so why would you do so with your customers? Doing some background research before entering into commercial relationships is an effective way of making sure aged debt is kept to a minimum.
When checking up on a business, look out for red flags that may indicate they’re suffering through some financial difficulty. Have they frequently avoided payments to other companies? Do they have a track record of paying after the payment deadline? If so, it may be best to avoid these customers altogether to ensure you’re not setting yourself up to run into aged debt.
Monitoring customer behaviour in terms of payments will also allow you to predict any payment issues that may arise, leaving you better equipped to deal with them if they do occur.
Always check your customers out before committing to anything!
Ensure any payment information you provide is correct
Check and double-check your quotes, invoices, and statements are correct before you send them out. If there is a mistake that may impact payment, it’s very unlikely that your payees will point this out to you – they’ll simply use it as an excuse to pay at a later date.
You should also include as much information and detail as possible when sending out quotes, invoices and statements. Always include the amount owed to you, the payment due date, bank details, billing address and any other information that they might need to know. The easier you make it for the payment to be made, the more likely it’ll be paid on time.
Don’t give customers the opportunity to make a late payment!
Invoice as soon as possible
Invoicing late encourages late payments – it really is as simple as that! Invoicing as soon as possible gives customers plenty of time to organise payment and encourages them to pay on time. You’ll avoid having to spend time chasing payments at that last minute, and you’ll reduce the risk of having that payment turn into aged debt.
If you’re struggling to send invoices out on time, step back and review your credit control processes. Ensure the process is as effective as possible, factoring in time and staff to guarantee invoices will be sent out as soon as possible.
Frequently follow up on slow payers
Occasionally, you’ll get customers who continually make payments after the due date. If this is allowed to continue without intervention, they may feel it acceptable to not pay at all, leaving you with frustrating aged debt that will be difficult to get rid of.
Instead of allowing this to happen, ensure that you’re regularly following up with late payers. This way, your customers will learn that you always make contact if a payment is late, which means they’ll be more encouraged to pay on time – anything to avoid that awkward ‘please can you pay us’ conversation!
If you make frequent contact, they may even prioritise you when they next schedule payments, meaning you’re even more likely to avoid aged debt build-up.
Invest in a Credit Control expert
It’s all well and good us telling you how to avoid aged debt, but the chances are, you probably already know-how. The issue lies with time. You’re so busy that you don’t have time to frequently follow up late payers or run in-depth background checks on new customers. You haven’t got enough hours in the day to review your credit control process or get invoices sent out on time, but you’re still worried about having aged debt build-up. This is completely understandable and is an issue many business owners will face.
One option it may be worth looking into is investing in a credit control expert. The main aim of a credit control expert is to put effective systems in place that serve to avoid aged debt build-up. Here at The Edwards Company, we offer a range of flexible, affordable credit control packages designed to support your business. You’ll receive all the benefits an effectively managed credit control system provides, but you won’t have to spend time managing it yourself. Instead, you can spend your time doing what you do best – running your business.