Debt Collection - Not the Solution

Giving credit when selling to other small businesses is common practice.

What is credit control?

Credit control, is not the same as debt collecting because credit control is a customer relationship building tool. The Oxford Dictionary defines credit as:

"credit Good reputation; power derived from this.
Trust in person's ability or intention to pay at some future time;
reputation of solvency and probity in business."

The above sums it up - the trust, or hope, you will get paid and there are few people who do not owe someone something. In business, credit was once only given as a convenience to those who did not really need it because it was more effective for regular customers to pay at month end rather than on collection of goods. Whilst this was in the 'my word is my bond' age it did not stop bad debts and Dun & Bradstreet did credit checks in New York over 150 years ago.

Granting credit needs a wide knowledge of business and a good understanding of human nature. Effective credit control ensures payments are made on - or soon after - due date by turning an overdue account into a priority payment in the debtor's eyes. This has turned credit control into a customer relationship building skill, which makes it assertive but non-aggressive.

One reason for late payment is a reluctance to ask for money. These days, the "only pay when asked" tactic is common and some advisors tell their clients to do just that. But even straight-up-and down businesses sometimes delay payment because they cannot afford to pay just yet.

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You outsource your Bookkeeping and Accounting - why not outsource your Receivables. It just makes sense.