The Analysis Comment


The time to act is now!


Getting businesses to understand the importance of credit control and credit-management practices


Gareth Fawke Director, Inksmoor Finance Group gfawke@inksmoor.co.uk


Businesses are too busy trying to do business, it is all sales, sales, sales. Build a sales force, increase your marketing and web presence, and get your corporate identity out there! Very few business people think, when


setting up a business or, more importantly, when it is in a growth stage: “I wonder how I am going to manage my sales ledger, debtor days and client risk?” Most businesses, that I see, tend to be in


the owner-manager market space, which means the credit management practises are: l Non-existent. l Carried out by the owner-manager. l Carried out by someone who has had this tacked on to their job role, but is not a specialist.


True value Value is in the eye of the beholder – okay maybe that was beauty, but the point is: if the owner does not see the value in a robust credit-management process, then money will not be spent on specialist resource. This usually means that debtor days are in


excess of industry standards and the business is at a much higher risk of bad debt. Changing minds and the perception of the


At this point in a business’s lifespan, the


owner, or directors, will generally understand the importance of assessing the risk of their debtors, paying attention to collecting their debt proactively and paying for someone to take on their credit control. They will see the value in spending


money to ensure their money is collected to terms.


Taking action At the point where a business realises that it needs to act, the sales ledger and the company’s debtors need some work to bring them back in line. A credit controller will need to ensure


A credit controller will need to ensure new process are put in place and build relationships with customers to ensure outstanding monies are paid to terms


value of credit-control processes usually takes a milestone in a business timeline to affect these changes. Typically these are: l Shortages of cash within a business. l Bad debt. l Increased borrowing to fund cashflow. l The company’s bank intervening. l The company’s accountant pointing out how bad the situation is.


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new processes are put in place and to build relationships with customers to ensure outstanding monies are paid to terms. It is not just down to a credit manager,


or credit controller, to ensure debtors pay to terms. Employing this ethos across the company into the sales people is key to ensuring that you are dealing with creditworthy customers. Many businesses look at employing a


part-time credit controller in-house, which can be effective, but can come with its flaws when queries are made on a day they are not there.


Other organisations will look into outsourcing specific


elements of the credit-management process to specialist credit- control companies who activate the process of proactively chasing invoices before they become due, and reducing bad debt. CCR


www.CCRMagazine.co.uk January 2018


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