8 Simple Ways to Improve Your Credit Control

According to recent research, approximately 1 in every 4 businesses will go into insolvency each year, largely as a result of late payment of invoices. Smaller-sized firms can be especially vulnerable to this - estimates show that they can be owed an average of £30,000 at any time. Regardless of the size of your business, you can't afford not to take credit control very seriously, especially when considered in terms of today's economic difficulties. Read on for some handy hints to help you keep your cash flowing.

1. Make your terms clear. Agree payment terms at the order stage and have those terms printed on relevant documents such as invoices. Terms should include any credit period and details of interest charges on overdue accounts. Don't forget all businesses have a legal right to claim interest from late paying customers.?

2. Think about having credit checks performed on large prospective customers. An online credit rating can be on your desk in minutes and cost from £10 upwards. Consider taking up credit references.?

3. Make your invoice clear. An easy to understand invoice will encourage customers to pay more quickly - don't forget to include a detailed description of the goods, a reference to the order number and the agreed payment date.?

4. Chase outstanding bills ASAP. This is perhaps the most important tip of all. Always concentrate on the largest debts first, customers you guess may be in financial trouble, and older accounts. Keep a log of all your calls - day, time, the name of the person you spoke to, and what you spoke about. Do not be embarrassed about requesting payment - never forget it is your money. Phoning is one of the fastest ways to persuade late payers to pay up, but never call on Monday or Friday.?

5. Deal with excuses. Always be skeptical of excuses - they are often tactics employed to buy time. Put these customers high on your chasing list. Have a standard policy on dealing with common excuses such as:

- "I haven't received your invoice". Check the invoice address is correct and immediately e-mail another copy to the person you spoke to and phone to check it has been received and when you can expect payment

- "I'll deal with it shortly". Ask when.

- "The cheque's in the post". Ask for the postal date and cheque number

6. Send 7 day letters. A 7 day letter is the first stage of the legal process - you cannot sue unless you have sent that person such a letter. Some businesses have a policy of not paying until they receive such a letter. Consider appointing a specialist debt recovery solicitor to send 7-day letters on your behalf. Letters from solicitors are often taken much more seriously and can produce significantly improved results.?

7. It's good to talk. Maintain a positive and personal relationship with your customers. You are more likely to get the results you want if you adopt a friendly approach. Tell them that their business is important to you, and whilst you have been advised to take legal action, you only wish to do so if there is no other way. Speak to the managing director or finance director of the business, or another decision maker if possible.?

8. Thank customers who are prompt with their payment.

?Whatever you do, don't delay. Unpaid bills should be dealt with as quickly as possible. Also make sure you have a written credit control system in place and that you use it. If customers continue in failing to pay invoices, contact an experienced debt recovery solicitor to help you recover your money.

Tim Bishop is senior partner of Bonallack & Bishop , a firm of specialist Debt Recovery Solicitors based in Wiltshire, Hampshire and Dorset. Tim has spearheaded the firm's expansion, seeing it grow by 1000% in the last 12 years. He is responsible for major and strategic decisions and sees himself as an entrepreneur who owns a law firm.

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