How Credit Control Software Could Save Your Business

Imagine 2 scenarios:

 

 

You have a client with whom you get on really well. You speak a couple of times a week on the phone, he orders new work regularly, and every so often you receive cheques from him.

 

You provide your goods or services as soon as he orders, and invoice him when you get around to it. You're not sure whether or not he always pays on time, or what the state of his account is, but he phones every few days, so it can't be that bad, eh?

 

And then you don't hear from him for a couple of weeks, then a month. You notice his blog hasn't been updated for a while, and his website offers are out of date. The cheques have stopped coming in.

 

A few days later you receive a letter from his solicitors. His firm has gone into liquidation and you have to let them know how much he owes you. You won't have much of a chance of being paid, as he owes the tax-man and bigger suppliers than you.

 

You try and work it out, then realise you've not invoiced him for a couple of the more recent jobs – too late now, as you can't invoice once you've received that liquidation letter.

 

As you look closer at his account you realise that although cheques have been coming in, they don't cover all of the invoices, and some of the larger invoices have been outstanding for a few months now. You thought he owed in the region of £1000 but you realise all the smaller jobs have added up and it's in the region of £5000, quite a large amount to your company, and a bit of a kick in the teeth.

 

You're going to have to work extra hard over the next few months to recoup that loss, in fact you’re not sure you'll be able to pull it back, and of course you have suppliers to pay, maybe even staff, as well as overheads. You keep the card of the liquidation company, just in case…

 

Now imagine Scenario 2.

 

Same client, same relationship. Except that every time he calls you log into your credit control software that tells you exactly how much he owes you, how overdue it is and how good he is at paying you. You gently remind him you can't do any more work until the last invoice is settled, and he pays up happily, as it's only a small amount.

 

When it becomes clear that he always pays late, you speak to him and explain your tight cash-flow, and rein him in a little. When one of his invoices is due, an email is sent to him reminding him.

 

He's still not the best of payers, but his account is pretty much up to date when he asks you for quite a large amount of work. You explain that you'll be happy to do it upon receipt of a 50% deposit. He offers to settle the outstanding invoice, but based on the info your credit control software has given you, you know that extending credit to him is a risk, so stand firm.

 

A few days later the letter from the liquidation company comes in and you realised you could have been in the middle of thousands of pounds worth of work for this customer, but thanks to your software giving you a warning, you're not.

 

You check his account – he owes you £100. It's not ideal, but it's bearable. You know you can still pay your bills and suppliers this month. Your business is safe.

 

That's just one customer – multiply that situation times the average amount of customers you have and realise that good credit control is one of the most important aspects of running a business.

 

There is software out there to help you – and it could be the difference between life and death for your company.

 

For more details on credit control software please see our credit control software page.

 

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