Credit Control
There are a few key things to keep in mind when it comes to credit control management.
You need to be clear about your payment terms with your customers.
They need to know when they are expected to make payment, and what the consequences are if they don't. This can be achieved through clear communication from the outset, and by sending invoices on time.
If your customers don't pay on time, Xero has a clever automated email option that can be used to nudge them. If they still don't pay, we can make those tedious phone calls and even advise on next steps if no payment is forthcoming. However, it's always best to avoid this situation, if possible, by being clear about payment terms and expectations from the beginning. We can help with that too.
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Here is what we get asked most...
What is Credit Control?
Credit is when you give your customers an amount of time to pay what they owe. Credit control is the term used to describe how that credit is managed. When terms are given to customers, such as 7 days, or 30 days, credit control is the process of ensuring all invoices are paid within those agreed terms or chased if they become overdue.
Why is credit control important?
Cash is the lifeblood of a business. Managing credit control effectively means the money is in the business, ready to pay payroll, or any costs relating to running the business. Businesses that do not keep on top of their credit control may struggle financially.
How do manage credit control?
To start with, it’s important to be clear and upfront about the payment terms you offer your customers. They need to agree to those terms in advance of you completing the work. When the work is complete, ensure those terms are clear on your invoices, along with details of how the customer can pay. You could send reminders in advance, or when the payment becomes due. You would then follow up with the customer until the invoice has been paid.
What if I don’t get paid?
If a customer hasn’t paid, it’s helpful to try and find out why. If they are struggling to pay, you could offer extended payment terms or a payment plan. If a client refuses to pay for goods or a service they have received and have agreed to pay, you could pursue legal action.