Paddy Nolan, Managing Director, LCMS Ltd, explains why it can be useful to outsource elements of credit control.
Profits are essential for a business to survive. But, in a tough economic environment, they are not quite as essential as cash. Even the most profitable business sometimes fails due to lack of cashflow. If the business is not being paid, then it could have serious issues with its own cashflows, many of which could be due to non-payment for products or services supplied. This is why it is so important for companies to ensure that they are paid on time.
There is often an emotional issue for credit controllers or company owners when it comes to securing payment. For example, the customer has bought her/his building materials from the same
hardware store for the past 10 years, becoming a key customer and you’re afraid of offending a good customer. However, there is no point in losing the business for fear of losing a customer.
It’s a fine line but no matter how good a client is or has been, accounts have to be paid. They are no longer good clients if they’re not paying anymore or have become slow payers. This is where a company like LCMS can become a key ingredient, working alongside a client’s credit control team in order to get payments in quickly. This can be done in a professional manner, without upsetting and annoying any of the client’s customers. Credit management and debt solution service companies specialise in getting payments in quickly. This is achieved through mediation and takes the onus completely off the client. It is ideal for all companies that deal in giving credit. It will take the pressure off in-house credit controllers who may not have the time to be chasing debtors.
So often, company owners and office staff get bogged down in many other areas of the business and credit control can be neglected. The key to getting paid is following up on calls. Telephone calls have a range of potential outcomes. The customer can promise payment. More often than not, these promised calls will need a second or third call to ensure payment is made.
Another possibility is that customers don’t answer telephone calls or return messages. These accounts need immediate attention and need to be closely monitored as they are likely to be the accounts that turn into slow payers, or worse, bad debt.
Having a good credit control team is essential for ensuring payments on accounts, and having a good external credit management service company to deal with non-payers is equally as important to prevent an account becoming a bad debt. The clearance of existing overdue accounts and maintenance of all accounts within your agreed credit terms is a must for any credit control team and should take priority above anything else to ensure cashflow within your company. Thereafter, if it becomes necessary, the involvement of a third party, who you can trust and work alongside, is highly effective in ensuring that slow and nonpayers are dealt with in a professional manner.
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This Business Support article featured in the May/June 2017 edition of The Hardware Journal.