Every business owner, large or small, needs to ensure that their customers are paying on time. As the recovery of debt is often time-consuming and unsuccessful, having proper credit control measures in place helps businesses manage cash flow better.
What is Credit Control?
Credit control is explained as the lending technique used by banks, financial firms, and business owners to lend money to consumers. Credit control focuses on lending money to consumers who have a strong credit score or credit record. While it’s essential to collect payments faster, there’s also a risk of having unsatisfied customers if credit control gets aggressive. Having a balanced credit control policy can result in positive cash flow for your business and your clients can get the financial flexibility they require to do business with you.
4 Tips for Effective Credit Control
- Apply stringent credit terms for selective customers
Not all customers are the same. While some have had a good payment performance in the past, some may have a poor credit score. Analyzing customers and tightening payment terms for selected ones helps reduce your business’s cash flow risks and cut down the costs and resources required for chasing late payments.
- Automate Invoice Sharing
Sharing invoices on time along with a follow-up payment reminder can significantly improve processing time and reduce the chances of late payments. Automating this process with a business intelligence software like BFM will streamline your account receivables.
- Follow-up as soon as credit terms exceed.
It’s vital to speak to customers immediately whose invoices haven’t been cleared. To reduce the chances of bad debts, talk to the customer and explain your company’s procedure for outstanding debt collection. To make the follow-up process simpler, you can also use a cash flow management software like BFM that allows you to automate payment reminders and share them via email, SMS, and WhatsApp.
- Use a Business Intelligence Software
As debts grow older, the more challenging they become to collect. However, spending most of the time chasing overdue payments can result in neglecting the rest of your sales ledger. Using business intelligence software to manage your cash flow streamlines your account receivables and payables. Most of these tools automate most of your accountant’s tasks, providing more time to your teams and peace of mind to you.
It is easy to forget about credit control when you are caught up in running your business effectively. ZikZuk’s BFM has been designed and developed for SME owners like you to take care of the finance management tasks that may not be on top of your to-do list. BFM keeps a check on your credit control policy by triggering the system and notifying you each time the credit limit is crossed. Are you looking forward to building a credit control policy for your business? Connect with our team today to address your business challenges and meet your financial objectives.