Credit Control – are you in Control or is it Controlling You?

The million dollar question – we mainly have 3 types of clients:

1. Controlled – credit control processes fully in place, completely in control of their finances with great cash flow management
2. Bread & Butter – clients who have some main clients who always pay them – maybe 20% of clients who contribute 80% of their income stream, so never collecting everything but no major cash flow issues
3. Peter & Paul – clients who just don’t know where to start with credit control, expecting everyone to just pay when the work has been completed, they’ve invoiced and 30 days later the money should just appear – constantly robbing Peter to pay Paul in their businesses

So which are you ? 1, 2 or 3 ?

The only place to be is at stage 1 – unfortunately there are so many businesses at stage 3, and this is not just any particular type of business.

In facilities management businesses, typically there will be lots of invoices per month, some larger contracted invoices, some smaller call out type invoices – all which need managing, cash flow is so important in business.

What we have found is that to get to stage 1 you must manage with structure and processes, including; credit terms being agreed, credit limits confirmed, constant contact with customers, building trusting relationships and agreements, cash flow management, invoicing correctly – correct descriptions, prices, purchase order references, dates and actually invoicing the correct people.

We feel the term ‘Credit Control’ is so misleading, from a business perspective it should be more ‘Control of Credit’ at the end of the day, you’re the one giving the credit, so you have to control it – that’s the difference between you being in control or it controlling you.

We’ve worked with Facility Management businesses with very little to no processes, incorrect processes and/or ineffective processes – creating a great business with growth month on month, but unfortunately aged debt also growing month on month – we’ve made some effective tweaks and moved £000’s off a report and into the bank account.

So, what processes do you have in place? Are you in control or being controlled?