For smaller businesses you can get a full time credit control provision for the cost of a part-time clerk. A part-time credit controller working two days a week can cost a business in the UK around £14k a year when you include employment taxes, holidays, pension contributions, sick pay and office space costs. And what happens when a customer phones or emails on the three days a week that the credit controller isn’t there?
Newly released Business Link data shows that nearly half of UK small and medium sized businesses have no efficient system in place to chase unpaid invoices. Implicit in this statement is that systems do exist. Efficiency is one thing but effectiveness is more fundamental, yet the two are closely related. Many businesses use very traditional credit control processes with a lot of manual correspondence and little use of the phone. A lot of credit controllers are actually afraid of using the phone, largely because they only chase invoices after they are overdue so every phone conversation is negative and defensive.
It doesn’t need to be this way. Effective credit control is as much about customer services as it is about a Finance department process. Contacting your customer before an invoice falls due – to ask if they have received the invoice and whether there are any problems – is not aggressive invoice chasing but professional customer service. Building a relationship with your customer is key to ensuring you are always top of the payment list, and you cannot do this if the only time you speak to them is when an invoice is overdue.
Equally, in smaller businesses it is a real challenge to employ, in one or two credit controllers, the mix of skills required to effectively support trading, manage credit risk and minimise DSO. Modern businesses realise that credit control is an increasingly specialised area and needs to be resourced and managed as such.
With increasing levels of business fraud, heightened credit risk and delayed payment by customers, effective cash management and credit control has never been more important. Today's credit control team needs to have a broad range of skills and software tools to support the business. Look at your team. Does it meet the demands of your business today and tomorrow? If not then you need to take action, but before your recruit take a look at outsourcing. You will get a higher skill level at a lower cost.
For smaller businesses you can get a full time credit control provision for the cost of a part-time clerk. A part-time credit controller working two days a week can cost a business in the UK around £14k a year when you include employment taxes, holidays, pension contributions, sick pay and office space costs. And what happens when a customer phones or emails on the three days a week that the credit controller isn’t there?
For around 30% less cost businesses could outsource the activity and always have a credit controller available to field calls or enquiries. This will lead to a dramatic improvement in cash flow, improved customer relationships, reduced bad debts, and ultimately more cash in the bank.
With such tangible benefits available, outsourcing credit control is something every small to medium sized business should consider.
