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It’s time for your credit control to catch up: Part 1
The typical credit control function is far from optimised. Wasting your business hundreds of man-hours per year and starving your cashflow, your credit control function needs to catch up to the new table stakes.
In a six-part series Chaser’s Brad Ewin covers off the essentials every modern credit control function needs. This week covers the three questions you need to be asking every single one of your customers to ensure you get paid on time.
It’s easy to fall into routines. Whether it’s Friday night pizza or a Sunday morning lie-in, we’re all creatures of habit. But not all habits are healthy. One particular habit that leaves invoices unpaid time and time again is the assumption that all of your customers are the same and should be treated the same.
It’s an incredibly easy and dangerous mindset to fall into; one you might not even be aware you have. Thankfully, there are three deceptively simple questions you can ask your customers to prevent your business falling prey to this trap. So remember to quickly fire off these three questions next time you’re speaking to a customer:
“What information do you need to be able to make payment?”
In an ideal world, issuing an invoice is all you would need to do to get your customers to pay, but this simply isn’t so. Every business you sell to is going to have their own unique internal processes and requirements to handle purchases and payments.
You should put the onus on yourself to learn what they are. Don’t expect your customers to explain them to you - they’re not the ones waiting to be paid. It’s not uncommon to be blindsided by something like a purchase order stuck in processing preventing your payment from coming through.
By asking this question, and asking it early, you’ll know exactly what info you need to give your customer (and the timescales to expect with their internal processes) to get an invoice paid.
“Who should I speak with to settle payment on this invoice?”
You might think you know who to speak with to get an invoice paid. You might think it’s the person you’re asking this question to. You might be right. But, it’s not uncommon for businesses to separate the responsibility for purchasing and payment across people or departments.
Save yourself the headache of days or weeks wasted chasing the wrong person about an invoice and ask this question up front.
“When do you make your payment runs?”
With the above two questions you can learn the what and the who, but what about the when? It’s not uncommon for businesses to batch their invoice payments to particular times of the month due to various circumstances. By firing off this question to your customers early, and understanding when exactly they can make payments, you can tailor your invoice chasing to ensure you waste less time asking for the unachievable and get paid sooner.
Arm yourself with these three questions and endeavour to ask them of every customer you currently have, as well as new ones you take on. Jot them on a sticky note right now and stick it to your computer monitor. It takes only a few minutes on the phone to get them answered, and with this info, you can tightly optimise your credit control function.
Next week, we delve into what you should be doing to automate your credit control function in Part 2: The New ‘Efficient’