Credit control is the system used by businesses to ensure that credit is only given to customers who are able to pay as well as pay on time. However, it is not always possible to determine which customers will pay so it is essential to set up a credit control system in order to avoid long-term debt and late payments. By setting up an invoice management system, it will help you and your business minimise any risk of loss from bad debts. Positive Collections provides a FREE
automatic credit control system which requires no software to be downloaded and can be accessed at anytime and anywhere.
This online system is ideal for sole-traders, freelancers and small businesses from all industries. This FREE
credit control service is essential for improving cash, reducing paperwork and saving time. Chasing payment can be a stressful and expensive process. However, this cost effective system enables you streamline your finances so that late payments become a thing of the past.
To find out more about our efficient online credit control system, simply click here.
Credit Control Process
The process of managing your invoices has never been so simple. Just follow these steps;
- Set up your FREE Positive Collections account
- Send out your invoices as normal, loading a copy for your own personal reference along with the your customers details
- Set your payments terms i.e. 30 days
- Once you have reached 15 days we will email you in regards to checking your account - deleting any paid invoices or marking them as paid
- When the end of your payment terms are reached an email will be sent to your client stating that there is an overdue invoice
- You will then be given the option of marking your invoice as paid, cancelling your invoice or emailing a copy to your client
- After +7 days of your payment terms you will again be prompted to mark your invoices as either paid or cancelled. If you still have not been paid however you may start your debt recovery process
If your clients still fails to pay your invoice after it has been issued again, you may begin your debt recovery process. Once you have opted to start this process, you will need to pay a one-off fee of £4.99. This competitive fee will cover you for all 4 letters/stages of your debt recovery process.
Importance of Cash Flow
Knowing your customer
When running a business, its essential to understand exactly who your clients are. Here are 5 steps you should always try to follow:
- Always check the exact name and legal status of the business you carry out work for. You should be aware of the companies structure .i.e sole trader. Remember businesses can disappear quicker than individuals!
- Always inquire and gather any information you need before starting any work.
- Try and gather random references from others who have done business with them
- Invest in credit reference information
- Set up some strict rules with all your employees and ensure they are not broken
Setting up clear payment terms can help businesses avoid developing a poor cash flow. With payment terms in writing, there is no excuse for your clients to make late payments or have no knowledge of a payment date. Here are 5 steps you should always try to follow:
- Always set out and agree payment terms in advance ensuring that you have it in writing. With no set date who knows when your payment will be settled.
- Make sure that any documents given by your customers does not alter any of the agreed payment terms. Its important to be aware that if you accept their order you may also be accepting the changes to the payment terms. If your payment terms differ to that of your customers, their terms will take precedence.
- It is often a great idea to include the wording "we will exercise our statutory right to claim interest at ..... and compensation for debt recovery costs under the late payment legislation if we are not paid according to our agreed credit terms". Although you may not intend to take action should this occur it is often used a deterrent against late payments.
- If you have an outstanding invoice, producing another invoice for interest and late payment charges is great way to enforce the issue of an unpaid bill.
Raising an invoice is the all important part of actually getting paid and the first step in commanding a healthy cash flow. Here are 5 steps you should always try to follow:
- Always remember the sooner you ask the sooner you will get paid.
- Ensure that invoices are drawn up correctly as mistakes can lead to late payments
- Make sure your invoice includes everything your customer needs for a quick approval
- Have a system in place to ensure that disputed invoices are resolved quickly
- Include wording such as "we will exercise our statutory right to claim interest at ..... and compensation for debt recovery costs under the late payment legislation if we are not paid according to our agreed credit terms" on every invoice and print your terms and conditions on the back.
Always remember that when customers fail to pay, they are technically holding onto money that is rightfully yours. Setting up a routine system for following up on non-payment is a great way to chase invoices for payment. Here are 5 steps you should always try to follow:
- Good customer service is key. If you are due a large payment it is a good idea to contact your customer before payment is due to ensure they have received the work and there are no queries
- Make contact with your customers if payment has not been received, making the consequences of non-payment clear
- If a customer consistently pays late or makes excuses it is perhaps worth considering whether you want to keep supplying them on credit terms. Sometimes it is not worth having bad debt over poor customers
- When chasing payment its important to be polite, professional and persistent at all times
- Getting customers to pay by electronic transfer and direct debit can save time
If you would like further information and advice on the benefits of using an invoice management system simply call Positive Collections on 0208 313 7887
to find out more.