Getting Credit Control Under Control
CREDIT CONTROL REMAINS ONE OF THE MOST MISUNDERSTOOD TERMS IN THE BUSINESS LEXICON
The simplistic view is that credit control is a means of identifying who owes you money, allied to a method of debt collection for recovering that money. Legal help is often seen as a last resort when the debt is not paid.
Stamp Jackson & Procter's Credit Control Unit aims to prevent debt becoming a problem. We ensure your customers are fully aware of the terms of trade at the start of a business relationship and your company's credit control process is an asset, not a liability.
The basic principles embrace sound financial and legal practice and in the present trading climate there is a strong case for reviewing even established trading relationships to ensure good credit control principles apply.
THREE AREAS OF CONTROL
The Credit Control Unit focuses on guiding your business through the three areas of a business relationship. We provide practical assistance in:
- pre-contract, before credit is given;
- contract, whilst credit is being given; and
- post contract, when the debt needs to be recovered.
Terms of a contract cannot be brought in later. It is essential in law to be able to prove that the customer was fully aware of your conditions when the order was placed and accepted. Many suppliers put their terms of trading on the invoice. Too late! The invoice follows the contract.
Stamp Jackson & Procter's Credit Control Unit have the experience and full resources for checking out businesses for creditworthiness, their trading history and the kind of people managing the company. This helps in the risk assessment process of deciding whether or not to trade or continue trading with a customer and in assessing whether and how to secure a debt. This is another area where professional advice is important. A personal guarantee can sound very comforting but the Courts construe them very strictly and they need to be drawn up with great care.
The essentials of credit control are knowing as much as possible about the customer (as potential debtor), deciding on taking security to cover credit, and above all establishing terms of trading incorporating conditions of sale. The latter is vital for any business and warrant professional legal advice not only in setting them up but in regularly reviewing them to take account of changes in the law and its application.
Preventing debt becoming a problem puts your business in a stronger position to carry out the recovery procedures if required. In practice, using Stamp Jackson & Procter's credit control services allows an early third party intervention and around 95% of our clients' cases are resolved without recourse to further legal action.
PREVENTION IS BETTER THAN CURE
The main areas where the Credit Control Unit's input can be crucial are in establishing the standard or non-standard conditions of trading and in the methods which may be used for recovery. Our extensive experience provided by the service is a comprehensive guide to ensuring your business can anticipate and plan for future credit control problems, protecting cash flow and profits. Using Stamp Jackson & Procter to assist with your Credit Control means you:
- avoid working for nothing;
- avoid expensive, frustrating and often fruitless debt collection;
- receive fast, practical, cost effective assistance to reduce your risk of non payment of debts;
- contract with the correct party who can afford to pay, which reduces the likelihood of a bad debt and recovery more likely, faster and less expensive; and
- improve your cash flow to provide financial security and money to spend on opportunities which will inevitably arise in the current economic climate.
All of which allows you to get on with running your business, identify further opportunities for investment and act when they arise.
For a free guide to Credit Control or to discuss credit control issues, please contact Credit Control Unit partners Andrew Procter or Alistair Latham on Tel: 01482 324591.
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