Credit Control: It’s not sold until it’s paid for
It’s time to speak up on behalf of the unsung heroes found in any medium to large business.
The mighty credit controllers, and their tireless accounts receivable teams.
We’re all familiar with the sales team, and who’s brought in the biggest deal this month. But what of those who convert promises into hard cash? Without credit control, businesses would run the risk of cash flow drying up and starving the business. We all know of businesses who survive without turning a profit (Amazon, amongst others) but nothing remains of those who lose control of their cash flow. It’s a one-time thing.
Sometimes even, worse than unrecognized, credit controllers are criticized by sales for preventing a deal! Rest assured, these are exactly the sort of deals that present unacceptable credit risk. And you guessed it; cash flow nightmares.
So how do they do it? What turns the hard work of sales and marketing, and output of the wider company, into cash at the end of the day?
Relationships
Like the best sales people, credit controllers balance hard financial sensibilities against long-term rapport and charm, always mindful that they are ambassadors for the brand and another face of customer service. Good relationships take time and effort to develop, but are invaluable in times of need.
Setting fair and practical payment terms, clearly stating these and following up on late payments in a polite, but progressive, manner all goes towards building a solid rapport between credit control and accounts payable departments.
Invoicing
Invoicing is at the heart of credit control and accounts receivable processes. Credit controllers rely on invoices being accurate and sent on time, to the right contact. Over 23% of invoices are paid late in Western Europe because of incorrect information, or incorrect contact details*.
With electronic invoicing and the automation of invoice generation, from suppliers such as Corcentric, accounts receivable teams are becoming more efficient and more accurate with invoicing. This increased efficiency enables the accounts receivable team to direct more time and effort to follow up on late payments – rather than spending time manually preparing and sending invoices.
Statements and Dunning Letters
Statements draw attention to invoices requiring payment. As invoicing becomes increasingly electronic, statements are able to reference electronic invoicing documents held on a server. This enables credit controllers to track who has received, opened, or acknowledged their invoices. This audit trail provides the ability to proactively manage exceptions and ensure payments are chased to bring the cash in sooner.
When statements aren’t enough, a dunning letter serves as an extra prompt for payment. Sending dunning letters electronically enables tracking and identification of receipt – supporting future action, should it be needed.
Document distribution solutions, such as Corcentric, can be configured to send communications electronically, as an initial preference, but automatically follow up with posted letters when there is no engagement with the electronic communication.
Workflow Tools
Credit control wouldn’t be the same without workflow tools such as Ero57 and GETPAID. These automate much of the chasing of unpaid invoices, as well as setting reminders and assisting with the identification of credit risks. This automation allows credit controllers to focus on exceptions and opportunities for the biggest improvements in cash flow.
Setting the right payment terms, and then following up with the right messages, to the right people, at the right time ensures credit controllers stay on top of credit risks.
The Credit Controller, the Hero of the Day
Like many important business functions, the best credit controller is an unseen credit controller. So next time you’re raising a glass to the sale’s teams triumph, or the ROI from the latest marketing campaign, just remember…. it’s not sold, until it’s paid for. Spare a thought for the silent hero: the credit controller.
*Atradius payment practices barometer – results spring 2015.