Credit Control is the strategy businesses use to monitor and review unpaid customer invoices. Here are our top 5 tips for businesses to be on top of your credit control procedure.
Credit Control - Top Tips for Businesses
Know your customer – It is essential that you know who your customers are, including their precise legal entity and contact details. Conducting credit checks and a Companies House search, if appropriate, will help reaffirm this information. Credit is a privilege. It is perfectly fine to ask for money in advance if you do not know your customer yet.
Detailed invoice narratives – Invoices should be addressed accurately with a detailed narrative of what goods or services your customer is being charged for. This will decrease the likelihood of customer queries and ultimately increase the speed of payment.
Clear payment terms – Making sure your customers are aware of and understand your payment terms minimises any confusion and sets out what is expected early in the relationship. You should record when they have received your terms of business.
Additional charge provisions – Consider updating your terms of business to include a clause that entitles you to make additional charges, such as interest or late payment fees. This will nudge customers to make payments on time.
Clear credit control procedure - Establish a clear and organised procedure for credit control to remind debtors that their invoices remain outstanding. You may consider ceasing the provision goods or services to clients if invoices are left outstanding for too long. If this does not prompt payment, then legal action may be necessary.
If you would like to improve upon your payment terms or credit control procedure, the Commercial Litigation Team at Porter Dodson would be happy to help. To arrange a follow up consultation, please contact us at Tara.Searle@porterdodson.co.uk.