The 3 most important things to keep your business afloat
July 1, 2010 by admin
Filed under Credit Control
People will tell you that marketing is the most important skill or tool you should have; others will say customer service; and yet others will say pitch perfect salespeople, but in my view, they're wrong.
Of course these things are important; without marketing, customer service and sales you wouldn't have much of a business.
But let me tell you what are THE most important areas of your business to focus upon in order to prosper and grow
Credit Control
Debt Recovery
Credit Risk
Let's have a look in-depth:
Credit Control
Credit Control means controlling the money you give 'on credit'. If you deliver goods and allow your customers to pay later, you're extending credit. If you allow clients to pay 50% up front and 50% 30 days after you've provided a service, you're extending credit. If you allow customers to pay a monthly invoice by cheque or bank transfer rather than standing order or direct debit, you're usually extending credit.
Which is fine – if you can keep on top of it. If you know who is paying when and ensure that they do. But it only takes a couple of bigger clients to pay late, or a BACS payment to be missed without you noticing, and your business could start to slide. Before long you're spending more time chasing money and payments than new customers and it could be the beginning of the end.
Debt Control
The flip side of credit control is debt control. While I understand that sometimes bills are paid late, and sometimes there are valid reasons, I speak to clients day in day out who have been owed thousands for months, when a good bit of debt control in the beginning would have kept on top of it.
Imagine someone pays you £100 a month for a service and one month the payment is late. You have two choices; chase the debt immediately in a friendly manner and encourage the client to pay while the amount owed is quite small. Or allow it to build up into 10 months of owed monies, chase for £1000, scare the customer to death and never see them (and maybe not your money) again.
Keeping on top of what people owe you means that you can nip any problems in the bud – not to mention that in some cases it can mean you getting paid rather than finding out 6 months later that the company owing money went out of business owing millions!
Credit Risk
Wouldn't it be great if every order form you received had one of two stamps on it?
“He's loaded and pays his bills on time – go for it”
or
“He's skint, bluffing and lives in his car – don't touch him with a barge pole”
If every time you take an order and extend any type of credit you have no idea of how credit worthy these customers are, you're taking a risk. And you're gambling with YOUR money, let's not forget, not theirs!
Make a point of doing credit checks on the people you extend credit to – it shows them that you're serious and flags up any potential problems early on.
So what's a business to do?
Larger companies may be able to hire people for debt and credit control, and buy credit checks on every customer that comes through the door.
For everyone else, I'd recommend the following 3 pieces of software:
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Credit Guardian - Check your prospects and customers out for Credit Risk; FREE software and annual subscription based on the number of companies and linked with Experian
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Credit Hound - Chase your debtors with Self-Chasing Credit Control software and make sure that you get your money back
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Debt Recovery – Harley Grove are pleased to have partnered with TAK-Outsourcing.com to provide this service for when nothing seems to work when trying to get your money from your debtors.
Don't let bad credit risk, bad credit control and bad debt recovery bring your business to its knees.
