After visiting with so many clients I have met some highly competent credit controllers, I have also met some who were not so competent!
Credit control is a vital role of any business, no matter how big or small the business may be. Creating sales and raising invoices is obviously important for any business, ensuring those invoices are paid can be just as important. Strong credit control policies and efficient credit controllers can lower the amount of bad debts and greatly improve cash flow - in business, cash is king! Having credit controllers with polished telephone, email, and people skills can also have a positive impact on business and client relations. As with bookkeeping, credit controllers can save business owners time, freeing time for business owners to focus on sales growth and other areas of the business.
To expand and diversify our source of free online training videos the Bookkeeping Master has created a training course covering the basics of credit control. As always, the course is totally for free and has been uploaded to YouTube.
Lesson #1 - An Introduction to Credit Control
In this course I will cover the basics of credit control - everything from what credit control is to actively chasing debts.
Lesson #2 - Credit Applications
For larger businesses there should always be a credit application process. New and existing customers that would like a credit account should apply. This allows you to check the credit history of the client and can provide support for legal proceedings. On a minor level, if also allows you to receive customer details for accounting and other software.
Lesson #3 - Approval Forms and Credit Limits
This video covers letters that approve credit accounts and also setting credit limits. Credit limits should be set in relation to...
The size of both businesses -If you are a newer business it may not be wise to over exposure yourself to credit customers, if your business is well established with other credit accounts and plenty of cash in the bank you can obviously take greater risk. The same principle applies with your customers, do not allow new businesses have large credit limits!
The clients credit history - depending if the customer has a mediocre or strong credit history will obviously impact how much you offer them in terms of credit. Some credit check software will even suggest a recommended credit limit!
Current and historic sales - if you are currently turning over £1,000 a month with a customer, why would you offer a £5,000 credit limit? £1,200-£1,500 may be more reasonable.
Common sense - use your common sense... Enough said!
Lesson #4 - Account Opening and Procedures
Once credit accounts have been opened you will need to follow credit control procedures
Lesson #5 - Chasing Debts
This is where the work comes in! Chasing debts may seem tedious but it is very rewarding. Over the years I have built some very strong business and customer relationships due to my periodic contact, I have manage to get some very large debts cleared and have seen a major positive impact on cash flow due to my role. Ensure that records are kept for all contact and correspondence.