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Controlling your credit

If you are struggling to collect payments it might be time to consider whether employing a credit controller – either in-house or outsourced – would improve your cash flow.

Contacting customers (especially large ones) before invoices become due is good practice for small businesses, but it is a time-consuming process that no one enjoys. In addition, business owners often look at invoicing and collection as a job they will get around to ‘in the end’ since it gets in the way of tasks that are perceived as more valuable such as sales and customer service.

It is a fact of business life that some customers won’t pay until they are reminded to. This can be a tricky and often uncomfortable conversation for a business owner, especially when they hope to make more sales to the same customer in future.

Where to start?

Credit checks and reports are a vital part of a business deciding whether or not to begin a relationship with a new customer, as they can inform what sort of credit limit the potential customer can afford.

Employing a credit controller will allow you to thoroughly investigate any potential new customers to ensure that they not only have the financial means to pay, but also that they are able to pay promptly.

If a customer misses a payment deadline, the credit controller is responsible for maintaining contact and recovering the funds as soon as possible. The longer a debt remains unpaid the more difficult it becomes to collect and the more at risk you are of being saddled with a bad debt.

DIY or outsource?

A call from a business owner can have more impact on a customer than contact from a credit controller, particularly if it is combined with questions on how the customer is doing and an update on how the business is performing.

The decision on how to manage credit control will be determined to some extent by how well you know your customers and how you feel about chasing up payment. Some business owners will have the time and inclination to remind customers that payment is about to be due and follow-up when it becomes overdue, others won’t.

Many accountancy firms offer credit control services as part of an outsourced finance department function. It may be that when a business owner factors in the value of bookkeeping, cash flow forecasts and management accounts services this becomes a worthwhile use of resources.

Lean on us

One of the most cost-efficient ways to collect cash promptly is to utilise accounting software as much as possible. Most accounting systems are able to automate statements and emails to late paying customers.

Credit controllers can help small business owners with the day to day running of their business, but you must also keep track of your day-to-day financial position. Businesses need access to their accounts 24/7 to monitor payments in real time and a cloud based accounting solution such as Big Red Cloud will give you instant access to the financial information you need.

Marc O'Dwyer

After completing a Graduate program in Marketing, Marc’s impressive sales career began at Allied Irish Banks, Pitney Bowes and Panasonic where he received numerous Irish and European sales performance awards and consistently exceeded targets and expectations. In 1992, Marc’s entrepreneurial spirit led him to set up his own business, Irish International Sales (IIS). Initially, this company was a reseller for Take 5 Accounts and Payroll software. Within four years, IIS became the largest reseller of Take 5 in Ireland, acquiring four other Take 5 resellers. He also found time to set up two mobile phone shops under the Cellular World brand and a web design company offering website design services for small businesses. In 2001, he bought the majority share in a small Irish software business, Big Red Book. At that time, the company was losing money. The company became profitable within two months, and Marc then acquired a payroll company to compliment Big Red Books Accounting products. In 2003, IIS were appointed as Channel Partners with SAP for their new SME product, SAP Business One. Marc sold his Take 5 business and concentrated on developing this new market for SAP As a result, by 2007, IIS was recognised as the largest Channel Partner for SAP in EMEA (Europe Middle East and Africa). In 2008, the IIS Sales Manager bought the Company from Marc in an MBO. He launched Big red cloud in June 2012, the online version of big red book, to date the company successfully converts 59% of trials into sales and the number of customers is growing rapidly. Marc continues to run both Big Red Book and Big Red Cloud which now support 75,000 businesses. He is a very keen sportsman, having played rugby for 20 years, represented Leinster at under 16 and under 20 levels, and league squash with Fitzwilliam Lawn Tennis Club for 10 years. Marc has competed in 11 Marathons, including the London and Boston Marathons, and has completed several Triathlons and Half Ironman races. He has also completed six Ironman Races in Austria(x2), Frankfurt (Germany), Nice (France) , Mallorca (Spain) and Copenhagen (Denmark)

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