Credit. You’ll either love it or hate it. Trust it or view it with suspicion. And maybe, just one experience can quickly hop us over from one side of the fence to the other!
Let’s be honest though, credit is the way the world works now – who of us doesn’t have a credit card? But offering credit to our customers can be tricky, and we may be unsure as to exactly how and when we get paid!
Here are the ‘7 Deadly Sins of Credit Control’. Avoid these, and you’ll be able to confidently offer credit to your customers, and sleep well knowing that your money will come flowing in!
- Undefined terms and conditions; whilst of course, we do love to be able to trust people, it is necessary to have terms and conditions set in place, regarding things such as when the payment is due, how late a cancellation can be made, or how late a customer canlevae it to report a defect or something wrong with the work.
- No set-in-stone credit policy; it’s all very well allowing customers some time to pay – but we need to be clear on exactly how long that is, and it’s much better to have the same rules in place for everyone! Make the due date clear on your invoice, and ensure that you send a reminder, and even call them towards the end if need be. And, there are companies in place to help chase these things up, if it gets that far. It may seem harsh, but nip something in the bud once, and it’s much less likely to happen again!
- Be wishy-washy with whether you work with cash or credit; depending on your industry, customers paying cash at the completion of the work, or being given credit may be the norm one way or the other. Work out what is best for you and stick with it!
- Pay out for a credit policy, and then ignore it!; You may have had a credit policy drawn up, with all good intentions, but just never quite been able to implement it! If you don’t feel this is something you’re capable of doing, reach out to us, and we can help find a solution.
- Procrastination; I know, I know – asking people for money is the most horrible things, even when it is in business! But being firm will show your customers what you expect, and will boost your confidence for the next time you come across a cheeky non-payer!
- Believing every word the customer says; you will have heard it all, from ‘’my dog ate my chequebook’’ to ‘’I was abducted by aliens’’! Whilst it’s nice to show some compassion for individual circumstances, you have our own problems too, and therefore s nice to show some compassion for individual circumstances, you have our own problems too, and therefore you do need to be paid!
- Get insufficient credit checks; this applies especially when we’re looking at big amounts of money. A customer will likely provide a contact who will give a glowing reference – but they could be anyone! You may need to invest in a real, third-party credit check before allowing someone t have credit with they could be anyone! You may need to invest in a real, third-party credit check before allowing someone t have credit with you.
Overall, bear these things in mind, and credit will soon become you and your customers’ friend!
- Have clear T’s&C’s set out before giving credit
- Keep it fair and apply the same rules to everyone, wherever possible
- Have a clear Credit Control process and stick to it!
- Don’t be afraid to chase and fight for what you have earned!
If you do want any advice regarding any of this, whether you’re wanting to offer credit or get some, please feel free to schedule a call with us and we’ll be able to talk it through – just head over to our Get Started page to complete the quick questionnaire and book a discovery call with us.
for more tax tips & accounting advice check out PPF on YouTube
