When you set up your business, one of the first tasks you need to undertake before you sell your first product or service is to have a clear credit control policy in place. If you don’t have guidelines set for both your team members and your clients, you could end up struggling with small debt recovery and quickly find yourself in a challenging position financially. Let us help by taking away the stress and challenge of credit control and keep reading to find out more about what you should consider when creating a credit control policy.
What is a Credit Control Policy?
A credit control policy is a procedure you have in place to ensure your company is paid on time each and every time. Credit control itself refers to the process of selling a service or product by extending credit to your customers. This allows them a certain period of time to pay for the goods or services they’ve purchased, but still ensures you are paid within a timeframe which makes operating as a business owner feasible. In your credit control policy, you should clearly discuss payment terms, credit standards and your debt collection policy. This credit control policy will help to guide how you invoice your clients and ensure you are all on the same page to see continued success.
Setting Payment Terms within Invoices
As part of your credit control policy template, setting up payment terms within your invoices is something you should focus on with your accounts team. When you go to bill another business, make sure you make the terms of payment very clear to ensure you have a greater chance of being paid on time. This is the first step in establishing a selective credit control policy and can help to reduce the number of clients you work with who don’t have the means to pay you on time. You’ll also find that your client relationships often improve thanks to your clear communication, as other business owners are grateful to know the expectations you have when working together.
Protect Your Business with Credit Control
When working with new businesses and clients, you need to ensure they have the ability to pay for the goods and services they buy from your business. Credit control is a process that works to check customers and supplies to ensure they are worthy of your time and energy. It ensures you have a good chance of being paid on time by your clients and will help you to put measures in place to avoid late payments. You can of course consider offering client payments plans too, which can help to spread out the cost of purchases, but you still want to make sure they are able to pay you on time.
The word credit doesn’t just apply to financial transactions, as it can also refer to a service or product you provide before the payment is given. Businesses of any shape and size that share their products and services with the world should have a credit control policy in place, as it’s not something that’s just limited to credit card companies and banks. If you are dealing with larger sums of money, you might also want to run credit checks on your customers to avoid issues with small business debt collection. Our team will be able to work with you to suggest the best policies for you based on your business type and current concerns.
Why is a Credit Control Policy Important?
If you’ve just recently opened a new business or don’t currently have a credit control policy in place, you might be wondering why this is so important for your business. Without a good system in place, you may find that you have struggles with your business cash flow in the future. When you have a strong procedure in place, your customers should continue to pay on time and you’ll waste less energy and time chasing up overdue payments. You’ll find that your finances remain in a good place to keep your business running smoothly and allow you to focus on the things you do best within your business. You’ll also be able to focus on expanding the business as you continue to grow, helping your company to go from strength to strength.
A credit control policy is something that businesses of all sizes should consider implementing at the early stages of the business to ensure that you receive payments on time and can continue to expand your business year after year. As a business owner, there’s nothing worse than chasing up late or missing payments, but our team will be here to help you avoid this in the future. Contact us today to learn how we can support your business and help you to have the most profitable year yet.
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