Cash flow control within your business is fundamentally important yet so many of us retiring away from it or put it to the bottom of the pile to be concerned about another day. Most of the time you are too busy running your business to realise that customers have not paid. Whether it is because we are too busy or too polite to ask for payment, the fact remains that a credit control function is very important to businesses performing well in today’s difficult economic environment. A lot of businesses may continue to deal in the short- to medium-term even if they are making a loss. This is possible if they can, for example, delay paying creditors and/or have enough money to pay variable costs. However, no business can survive long without enough cash to meet its immediate needs.
It is a role that will not suit everyone and preferably should be a separate function carried out by someone other than the salesperson and someone other than who has carried out the work. A customer relationship with the credit controller should be a lot different from the relationship with the entity providing the goods or service. Although getting the salesperson or manager to make sure the sales invoice is correct and agreed by the customer in the first request will reduce credit control issues, having someone to take over from there and make those telephone calls and send out statements will help to push customers to pay.
Good accounting systems can underline an overdue debt however a credit controller needs to be in place to identify this, report it on a timely basis to the appropriate person in the team and take action accordingly with letters, sending out statements and copy invoices. Telephone calls are not always necessary, however when calls are made, the credit controller should know the name of someone to contact on each occasion. A process should be recognized and adhered to in order to decrease bad debt and late payments.
If you think your business needs help in this area and you would like some help and advice relating to this, please do not hesitate to contact us on + 91 11-28-543739 | +91 981-015-8561 or visit our website www.charteredaccountant-india.com