Every year, small businesses fail because they run out of cash. One of the main reasons for this is cash flow problems caused by slow-paying customers and bad debt. Unless you implement a clear credit control process, your business’ ability to grow will be under threat. 

Bad credit control not only impacts your business, but it could also impact your suppliers. For example, if a customer fails to pay you on time, damaging your cash flow, you may then fail to pay a supplier, damaging their business as well and your relationship. 

One of the quickest ways to improve your cash flow (and avoid a vicious cycle with customers and suppliers) is to implement a good credit control process. 

Credit control can often be regarded as a time-consuming and attention-grabbing drain on resources, taking you away from growing and nurturing your business. If not managed correctly, it could hamper your success. But it doesn’t need to be like this. 

We’ve put together an article outlining our top 4 simple tips for credit control best practices.

It’s important you have a good credit policy in place that fits your business. Some businesses may have a generous credit policy to attract customers to their business. Others prefer to keep a tight rein on their cash.

Whatever approach you take, it’s important communicate it with your customers in writing before starting any job.

However, it is also important you look at each customer specifically.

It may be that you have to adjust your terms for specific customers, or for big jobs do a credit check to ensure payment can be made and an appropriate credit limit given. In the current climate, for those with poor credit ratings, you may want to get a deposit paid upfront too.

As Benjamin Franklin and everyone in the business community would say: Time is money. And time really is money when it comes to getting your invoices out.

Here are two examples of invoicing that I’ve experienced as a customer. You decide for your yourself which response you’d prefer from your clients when the invoice lands:

  • The first, a local carpet supply and fitting service. They always ensure their invoice lands on my doorstep the day after they have fitted new carpets. By this point, the room looks amazing, the carpet is barely walked on, and they have tidied up any mess left before leaving. I make a point of paying their invoice the very same evening, because I’m still reminded of the wonderful job they have done and want them to know it’s appreciated. The value of that invoice (a room that looks beautiful) is still fresh in my mind.
  • The second, my plumber. I’m sure I’m not alone when I say that nothing is worse than a cold shower first thing in the morning. It actually makes me seriously sad if the water heating system breaks (which is often when you live in a village with frequent power cuts, and a hard chalky water supply). I immediately text my plumber, who is an angel, and will often resolve the issue that day or the next. He is so busy though that it’s often weeks before his invoice hits, by which time I’m over my crisis, and in all the joy of nice hot showers, I’ve forgotten about the payment and I don’t get round to paying him until weeks later. The work my plumber did was far more urgent and important to me than my carpets, but the urgency was removed from paying a job well done after time had passed.

Prompt invoicing is vital – not only for catching your customers when they are still thrilled about your excellent service, but for your cash flow because the sooner you invoice the sooner your credit terms kick in. Whether you are a service or supply business, you will be incurring costs for work the minute you take on the job. So, the sooner the invoice gets out, the better the cash flow and the lower the risk of bad debts.

Delays in invoicing means you are effectively extending your credit terms!

Even if you get the invoice out instantly, if you have limited options for quick payments, you’ll still be playing a waiting game.

There are plenty of secure online payment services which you can even link to your online invoices for easy payment so you aren’t left waiting on a transfer or even a cheque still in a few cases. We recommend using GoCardless, an online direct debit service that takes control of the whole collection process on your behalf.

We often find that behind businesses trying to improve and keep on top of their credit control, is a very stressed credit control manager exhausting themselves trying to reduce the cost of debt recovery.

You can drastically cut the pressure, time and reliance on your staff by setting up an automated system to chase habitual late payments.

This ensures credit control chasing is done consistently on the dates and policies set by the business owner. No deal due to increased workloads, holiday or sickness.

We recommend using Chaser – a simple to use software that has completed transformed our own credit control or Fluidy – a credit control and basic cashflow forecasting tool.

Here’s how we reduced our client’s time spent on credit control by 90% and nearly a 20% increase in respond rate. Their cash flow improved radically.

Book a demo with one of our experts to see how Chaser and Fluidly can transform your credit control and boost your cash flow by emailing discovery@a4g-llp.co.uk

Steps to make now

  • If you haven’t got a credit control process in place, get it in place now
  • Review it and measure the success of it
  • Ensure your terms of business are fit for purpose
  • Communicate your terms with your customers
  • Take action if payments are not made
  • Book a demo with us for how Chaser or Fluidly can help save you time and money

If you need some support putting a good credit control procedure in place, talk to us. We can review your cash flow and find terms that will work for your business and your customers. Email discovery@a4g-llp.co.uk or call 01474 853 856.

P.S. If you’d like to review where your cash flow is right now and see how late payments area affecting your business, download our 5-minute cash flow tool here.

Contact me today!

Emma White



01474 853856

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