10 Credit Control Tasks You Can Do Before Outsourcing to Your Debt Collector
The COVID-19 has taken the world by surprise and we at Debt Recoveries Australia and ADC Legal wanted to share some our top 10 credit control tasks you can complete before you send the debt to a debt collector. Follow this guide and set yourself up with a reputable debt recovery agent now, and have yourself prepared for business post COVID-19
The best strategy to deal with outstanding debts is to try to ensure they do not happen in the first place. Put strict penalties on your invoices and contracts for non-payment. Ask for personal or directors guarantees. Do a full credit check on your prospective customer. See this link for some free penalty clauses and templates you can use: https://debtrecoveries.com.au/credit-control-free-template-pack/
- Review your invoice
When was the last time you reviewed your invoice structure? Do you offer appropriate payment methods for your market, and how clearly are these stated on the invoice? Design is important in a range of business aspects, but it can also make a vast difference to encourage prompt payment.
For instance, are your credit terms clearly stated? Can the customer see exactly what they are being invoiced for? Take the time to compare your own invoice against others you receive to see if you could try something new.
- Have a credit policy and stick to it
This is basically your terms of payment. It can be as simple as stating how many days your customer has for payment and what you will do if they do/do not pay. E.g. You may give a discount for early payment or you may charge interest for late payment. If your company does have a credit policy, ask yourself how well you know it? If the answer is ‘not very well’, how can you be following it? Take the time to read back through it and make sure you are following the steps. Credit policies are there to help you and when done right, should be based on best practice to improve performance.
- Contact customers BEFORE the invoice is due
Calling or emailing a customer a few days before payment is due can be a highly productive exercise for a credit controller. As well as bumping your invoice to the front of their mind and ensuring it hasn’t been misplaced, it will often encourage them to pay it within terms as they won’t want the awkward conversation the day after it exceeds terms asking where payment is.
It will also help to identify customers who are genuinely going to struggle to meet your due date and allow the company’s cash flow forecast to be adjusted. After all, no-one likes nasty surprises.
- Contact customers immediately after the due date
Many of our clients don’t actually do this step, preferring to just let it ride. However, often all it takes is a phone call or email. Contacting them on the due date sends a strong message that you want payment on time, not the day after the due date. Set up automated emails to go out just before and just after an invoice is due. Both your emails should have a friendly, gentle reminder of your strict terms of payments, as outlined in point 1.
- Pick up the phone
Do not be afraid to ring your customer. This sends them a strong message that you are firm about your terms and that you take account receivables seriously. Remember, friendly, yet persistent. Your tone should be much firmer when discussing invoices which have been overdue for a long time but keep it friendly.
Ultimately, the exercise should be used as an opportunity to explore why the invoice hasn’t been paid, reaffirm how important their payment is for your business, resolve any disputes that may exist and explain the steps your business will take if payment isn’t received.
- Review your sales ledger
This is arguably the most important job for a credit controller. If you do not know the status of each invoice and customer, it is almost impossible to take the right action at the right time. Develop the habit of doing this every morning and use it as a tool to plan your day.
Focus on the invoices which have exceeded terms – procuring payment from these customers has to be your number one priority as the longer their invoices go unpaid, the more difficult they will be to recover.
- Credit check long-term customers
Many businesses will have a large proportion of repeat customers who you have been supplying for several months or even years. But whilst you have probably completed a credit check on them when they made their first order, when was the last time you did so? Two of the top credit reporting companies in Australia are Equifax or illion Express.
Routinely conduct credit checks on those long-term customers for a more up-to-date picture of their business. Credit reference agencies have subscription models to maximise value for their clients, whilst it is also possible to credit check businesses on an ad hoc basis.
- Train yourself to be a better credit controller?
Whether it is a seminar held externally or you employ a professional to talk to the whole department, training can be an excellent way of identifying new methods to improve results and put to bed any poor habits you might have gotten into. AICM ( Australian Institute of Credit Management) is a particularly useful point of reference. They have an abundance of training and professional development courses available.
- Outsource to a Debt Collection Expert
The longer you spend on unpaid invoices, the less time you will have available for your core business functions. This is where it can be useful to call on the resources of a specialist debt collection agency, as they will take on the burden of recovering payment and use their expertise to secure the money you’re owed. Call Debt Recoveries Australia on 1300 799 511 or email us at email@example.com for legal matters contact ADC Legal on 1300 799 820 or email at firstname.lastname@example.org
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