It’s no secret that credit control is one of the core components of a business, and it’s essential to ensure that you are being paid on time. Following some faulty practices for credit control can severely impact your company and other problems.
With the onset of the new year, it’s essential to look back at the mistakes you made in 2021 and stop them right away. Carry out a close evaluation of your order to the collection phase and find the loopholes.
All of this will clarify what you should leave or continue to employ in the future. To make your work easier, we curated a list of 5 credit control mistakes that you should stop doing in 2022.
1. Carrying Out Manual Processes
Having a passive paper mechanism or documentation can eat up a lot of time and push aside your payments. If you haven’t considered automation in payment operations, you leave money on the table, and you should immediately work on it to avoid any further delays. Your credit performance can take a considerable leap if you start building smooth in-house processes.
2. Poor Money Negotiations
It can be daunting to ask about payments, even if the money is rightfully yours. If you avoid getting into money conversations and feel embarrassed to inquire about delayed invoices, then it’s time to leave this habit. Learn about effective negotiation and communication skills. While asking for payments, don’t be rude as this can ruin your business relationships. Try to get over the fear of money calls.
3. Lacking a Systematic Payment Cycle
Despite numerous government regulations, small businesses have to face supply-chain bullying. If you are not following credit management practices, start doing it at the earliest. Keep a proper track of monthly payment cycles, charge a late payment fee and, include interests within invoices. If you find some regular offenders, then make a separate list for them and stop your business alliances to avoid such instances.
4. Ignoring Late-payers
Several companies continue to supply their late-payer clients without taking any action. If you let them get away quickly, there will be no change in their behavior. Start preparing a list of persistent defaulters and warn them that you’ll stop supplying them if they don’t clear invoices on time. It’s better to end relationships with the wrong customers than dragging yourself into irregular cash flow.
5. Ignoring Payments From The US
In some cases, you will see your US clients skipping payments, and the reason could be the slow and insufficient payments. If you are not collecting or settling payments for them, it’s time to start building a more robust relationship. While dealing with these clients, don’t forget to take extra steps to keep them happy. Keep track of their payments, follow up, and keep a positive relationship with them.
6. Not Tracking Payments in Real-time
It is imperative for those dealing with clients via third-party providers to track payments in real-time. The payment cycle will end up tracking the process more realistically. You can automate this work to have automated payment trackers, and your business credit score would be in safe hands.
7. Not Providing Clear Payment Information
When customers reach out for support, there’s a good chance that they will ask for clear information on how they should be paid and what is a good time to pay. If you’re not willing to provide such answers, then it’s time to think again. You could either send an invoice with only the payment terms, or you can include an email to their inbox. Be certain that you provide a link to your payment portal where customers can easily make payments.