Recession Proof your Credit Control

By following a few simple steps you could recession proof your credit control and reduce the incidence of bad debts and increase cash flow:

1.    Make a list of every invoice outstanding whether it is due or overdue and flag all invoices that have reached 20 days old from the date of invoice. We recommend using a spreadsheet package to do this.

2.    Include columns such as Invoice Number, invoice date, invoice balance, contact details, a due date and a comments column.

3.   Ensure there are no credits or payments to be allocated and that the customer hasn't been given different payment terms to your standard terms.

4.  Work through the list dealing with the largest balances first.

5.    Send a statement out to every customer at day 15 of your 30 day credit terms ensuring your statement shows a due date. You could even print a copy of your terms of business on the reverse of the statement. Statements can often generate an influx of payments before the invoice is due.

6.    Have a copy of the invoice(s) in front of you when you make your first call. Does your invoice show a due by date and how your customer can pay? Do they have multiple invoices that you could be chasing even if they aren't yet due?

7.    Start calling your customers from day 20 of your 30 day credit terms to ensure they are in safe receipt of your invoice and that it is query free.

8.    Be courteous but firm and ask the question, when can we expect to receive payment? You won't know without asking.

9.    Keep all notes updated with as much information as possible and add an extra column with the date of your next contact.

10.  When your customer confirms a payment date, follow it up 3 days later to allow time for finances to clear.

11.  If your customer has a query, log the query on your spreadsheet and pass to the relevant person within your company. Put a date in your spreadsheet of no more than 5 working days before you chase to resolve the query. A query is only resolved when the customer is happy to pay.

12.  At day 30, if you have not received a response from your customer send a strongly worded yet courteous letter reiterating your payment terms and that payment should be made immediately.

13.  If a promised payment does not arrive on the date expected or at least 3 days after the date, call your customer again for an update.

14.  If all else fails and your invoice becomes seriously overdue, take further action by sending a final reminder letter giving your customer 7 days to make a payment before legal action is taken.

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