Top Tips for businesses - Credit Control
Released On 16th Dec 2022
Credit Control is the strategy businesses use to monitor and review unpaid customer invoices. Here are our top 4 tips for businesses to be on top of your credit control procedure.
Credit Control - Top Tips for businesses
1. Know your customer – It is essential that you know who your customers are; their precise legal entity, their contact details, and their preferred method of communication. You will increase the likelihood of prompt payment if you send invoices to the right person in the right way. Credit is a privilege. It is perfectly fine to ask for money in advance if you do not know your customer yet.
2. Detailed invoice narratives – Setting out exactly what goods or services your customer is being charged for will decrease the likelihood of administrative queries and increase the speed of payment.
3. 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.
4. Additional charge provisions – Update your terms of business to include a clause that entitles you to make additional charges, such as interest or late payment fees. This will likely nudge customers who are slower or more difficult with payments.
5. 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 CommercialLitigation@porterdodson.co.uk.
