Worry only about the things that are in your control, the things that can be influenced and changed by your actions, not about the things that are beyond your capacity to direct or alter.

One of the main things in any business in your control no matter how large or how small you are is to get paid on time.

Many people believe that they will lose their customers if they chase them for payment. This is a false belief.

1.       If you tell your customers that you are incorporating a credit control system your customer will see you as a more professional body and  will understand when you chase them for the outstanding payment that it is part of the system.

The difficulty lies in when you are a small business and you deal with the day to day operations and sales. If this is the case see if you can get someone else to make those phone calls for you, or send a generic reminder email.

Remember the customer has taken your goods or services and is expecting to pay, they usually just want to see how long it will take before they have to make payment.

So if you are worried about cash flow and are not getting paid on time – this is one of those things that you can influence and change by the actions you take within your business.

Setting Up a Credit Control System

Mismanagement of cash flow is the single biggest reason that small businesses go under. Therefore, a good credit control system is an essential part of any business' accounting procedures. Maintaining consistent cash flow, avoiding bad debt and minimising late payments are essential for survival. Use the following checklist to set up a system.

Things to do

1. Set up a detailed credit control system

It must allow you to identify

·         Invoices that have been raised,

·         sent to customers

·         Paid

·         Need chasing

·         Train several people on the system and test it thoroughly.

2. Credit-check your customers

To do this, you can approach their bank for a reference; use a credit reference agency; or ask their other suppliers. Establish how solvent the customer is and whether they are likely to have any problems paying their invoices on time.

3. Decide on your general payment terms

Most importantly, decide on a payment date. Bear in mind that new customers should only be given a short time in which to pay. Go through the terms with each customer.

4. Send invoices promptly

Try to send all of them out the same day as goods are sent or delivered or service provided. Make sure the invoice is sent to the correctly named and titled person, at the right address.

5. Start an automatic reminder procedure

Flag invoices that are due; Phone, to chase up payment.

6. Appoint a 'debts person'

This should be a trusted employee in charge of following up bad debts. They should keep a record of all calls and letters sent. Remember you can charge interest under the Late Payment of Commercial Debts legislation.

7.  Have a stop list for late-paying customers

Circulate this list to all appropriate employees to prevent further credit or goods being supplied. Inform the late payer that they are on the list.

8. Organise a sufficient overdraft

You should have enough overdraft to cover the worst possible periods of cash flow.

Best practice

• Educate yourself/your staff with credit control training.
• Employ the services of a credit management consultant at least once every year to see if there are improvements you can make.
• Keep talking to debtors. Don't lose your temper with them, but make it clear you are prepared to take debt recovery action if they do not settle the invoice.

Predications for 2012

 HAPPY NEW YEAR all the best for 2012

Predications for 2012

As a business you can make your own predications. In order to develop and build your business you require systems and processes.

Have a efficient credit control system and improve your cash-flow.

How does this work?

1.       Have a person who is willing to speak to customers do the credit control.

2.       Ensure that you have a default diary in place to chase late payers immediately

3.       Do not allow them any leeway far too often we hear from our clients that they allowed their customers time to get paid from other people in order to allow them to get paid and the next thing you know 6 months have gone by.

4.       Be sure to draw a line in the sand and know when the outstanding amount has become a debt

5.       Chase the customer as soon as possible when payment has not been made on the promised date.

By ensuring you are getting paid on time allows your business to focus on growing.

Raising Cash - Top tips for credit control

Many thousands of businesses go bust every year simply because they are owed money and can’t juggle the cash flow. A well planned credit control practices can avoid cash flow issues.

Liquid Recovery’s top tips for controlling your business’s credit control

1. Getting credit ratings

2. When getting references make sure you confirm the potential customer’s trading name and address. Ask how long the referee has dealt with the customer, what credit period they give the customer and whether they get paid on time.

3. Set an upper credit limit for each customer. This should be based on references and your own checking. Do not allow yourself to be bullied into giving more – you should never give more credit than you are prepared to risk.

4. Make sure you set a minimum order size for credit accounts. Keep control, and check if anyone tries to exceed the limit set. You must stick to the rules you set.

5. Credit terms must be understood. The terms will set out the maximum credit period i.e. how many days after the invoice payment is due, or whether there is a fixed day or month to pay on. If you have some review them and update them.

6. Consider offering a discount for quick payment if it is feasible. But this can be problematic as some customers may take the discount and still pay late!

Some companies find that offering regular rebates to regular good payers is more effective than discounts. These can be based on a percentage of the value of their purchase.

7. Develop good habits for every day credit control. These include:
• invoice promptly
• call to check that goods have arrived and customers are happy. Use this call as both good PR and to confirm the payment details
• keep unpaid sales invoices in date order, so you can see the oldest outstanding invoices
• have a regular slot each week to chase outstanding invoices. Always focus on the largest debts first, followed by the oldest. But also chase up early any customers you suspect may have problems paying. Don’t put it off. If you can’t do it yourself, get someone else on the case, but do not let the timescale slip. Make sure a note is made of the outcome of the conversation.

8.  Once a month the total credit outstanding across the whole of the business should be checked and recorded. This gives a good snapshot for now and a comparison for the future.

9. Habitual late payers play havoc with your credit control system. You soon get to know who they - call them just before the payment is due to confirm it will be on time. If it is not paid stop all credit until the debt is paid

.

10. Bounced cheques should be kept (as evidence) and the customer asked for a new one.

11. Have a system for chasing debts. Telephone late payers after a week and ask for a reason. Keep a written record of the conversations. If you can’t get hold of someone, try at different times of the day and send reminders out. Call regularly. You will hear plenty of excuses but have tactics to deal with them. For instance if you are told the cheque is in the post, ask for the cheque number. If the customer says they don’t have the money leave them in no doubt you will chase your money - and employ a debt collecting agency if necessary – which will end up costing them substantially more.

12. Be polite, persistent but never apologetic – it is your money and you are determined to get it.

What our client say about our credit control services

Steve Bridson

(client)
Steve hired you as a Credit Control in 2011 and hired you more than once

Top qualities: Great Results, Personable, High Integrity

“Working with Rashmi has had a HUGE impact on our business. We get great confidential credit control services where they ensure that we are paid on time and maintain a good relationship with our clients. The reporting system employed is excellent and we are kept fully informed. I have no hesitation in recommending Liquid Recovery and their staff who have done an excellent job for us.” December 7, 2011

Testimonial

“The first time I sent a overdue account to Liquid Recovery the initial reply was swift, interest was added to the debtors letter and within days we had a firm commitment of payment which was received the same day to my account by bacs. Compared to going to court this was a breath of fresh air, with no delay tactics and no having to attend court and taking time out of the business.

Liquid Recovery has now recovered 4 invoices within the last 12 months and one of these was from a Solicitor for 9k. 

You have one choice send it to Liquid Recovery every time”

Simprint, Halifax, Sowerby Bridge.

Testimonial

I used the services of Rashmi and Liquid Recovery for a recent debt recovery problem that I was having with an ex-client. I cannot recommend Liquid Recovery highly enough; they dealt with the case quickly, efficiently and professionally. The whole case took around a month to resolve and resulted in the majority of the debt being recovered, for a very reasonable fee...an outcome that I could never have secured if dealing with it myself.

I would have no hesitation in recommending Rashmi and all of the staff at Liquid Recovery to any of my contacts in the event of a debt recovery issue arising. Many thanks to you all and keep up the good work!"
Adam Croft of Digital Arc