The Last Word Comment


Why communication is key to a great credit-control policy


In peer-to-business credit management, it is essential that the credit department is involved at every stage of the client relationship


Michael Lawther Legal and operations manager, rebuildingsociety.com Michael@rebuildingsociety.com


Imagine a long-time friend calls you up, asking for your help with some difficulties that they are experiencing, due to risks from a new opportunity. Are you more likely to offer assistance if


this is a regular acquaintance who you speak to regularly, or if this is the first time you have heard from them in years?


Conveniently separate It is sometimes operationally convenient for organisations to have a credit control department that is separate from marketing, sales, or customer support. When a payment is late, they are often


passed a file for a client that they have no prior knowledge of, or relationship with, and are expected to follow a defined recovery process. However, to be truly effective, credit


management cannot be viewed in isolation, and must be incorporated, as much as possible, into all stages of a client’s journey, starting at the very beginning. I will look at how.


Initial involvement Initial client onboarding presents the first opportunity to establish communication channels. Involving the Credit Control team this


early, allows businesses to use credit- management expertise to choose the right clients and to offer sensible terms that could protect them against a future delinquent client. Communicating with clients, and finding


out as much as possible about the business, enables the identification of potential risks. Only when you add communication to the


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Building a relationship with a second or third point of contact within a business can prove invaluable to successfully navigating through a difficult period if the primary contact is no longer there


external data sources, like credit reports and financial statements, does the real picture of the business, and the story behind the business, emerge. In the peer-to-business sector, making


the client view the crowd as a source of potential knowledge and expertise from the


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outset, rather than as an anonymised and homogenous entity, is crucial to enabling truthful and productive discourse.


Ongoing process The average SME will experience frequent changes. It is very likely that your long-term clients will gradually become very different organisations, perhaps due to changes in their management structure, their business size, or the product they offer. Building a relationship with a second or


third point of contact within a business can prove invaluable to successfully navigating through a difficult period if the primary contact is no longer there. A Cambridge Judge Business School


study in 2017 found that organisations, which were able to adopt a more dialogue- based model, managed change better, and that this was magnified where there is a lot of volatility or market sensitivity. It is tempting for Credit Control teams to


largely ignore clients during periods of consistent payment, and to only engage with them when an issue develops. Having regular discourse, to facilitate


updates and management information from clients, can help you to react proactively, minimise the development of problems, and respond as quickly as possible to any payment issues that may arise.


Conclusion By opening communication lines as soon as possible and maintaining them throughout your relationship with a client, firms can address payment issues earlier and dedicate more time to the selling of their services – rather than to chasing payments. CCR


April 2018


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