After ensuring your company really knows your customer, knowing when you can expect your invoices to be paid is the next step in an effective credit control process.
Agreeing payment terms in advance helps to ensure both parties accept and understand their obligations and allows for the creditor to forecast the arrival of funds, a key survival strategy in today’s turbulent economy.
One of the single most important aspects of effective credit control in any business is ensuring that you know exactly who you are dealing with, before any credit is provided.
If you don’t know who your customer is, it is impossible to correctly identify the risk involved in providing credit and means your company is doing business “in the dark”.
Safe Collections is proud to announce that we are now the official Debt Recovery partner of Halton Chamber of Commerce & Industry.
A company called "The Emergency Services (Media Dept) Limited" that falsely claimed to be linked to the emergency services in an attempt to convince small businesses in to placing adverts in its publications has been wound up in the High Court following an investigation by the Insolvency Service.
Telesales operators from the company would cold call small businesses across the country and claim to be "connected" to the Police or other emergency services and then try to sell advertising space in a magazine, with the funds raised allegedly going to support these services. In reality these funds were largely destined for the owners and no one else.
A publicly accessible database of company directorships could soon become a reality, following the conclusion of a consultation by the Department for Business, Innovation and Skills.
The proposals outline plans for a central registry of company beneficial ownership information - including details of trustees, where relevant, and of individuals with ownership of more than 25% of the shares in a company, or the equivalent proportion of its voting rights.
Many small to medium-sized enterprises (SMEs) across the UK are effectively being forced to loan money to large firms interest-free, according to the Federation of Small Businesses.
In one of a pair of landmark reports issued since the beginning of the year, the FSB warns that late payments and unreasonable renegotiation of payment terms is taking money out of the hands of SMEs, and allowing it to languish for longer in the accounts of the nation's largest corporations.
Late payment of invoices is now - for the first time in recent years - the single greatest risk to creditors, even outranking debtor insolvency in a report from credit risk insurer Coface UK.
According to the insurer, 60% of the claims it received in the first nine months of 2013 arose due to "a customer's protracted default" - that is, either late or non-payment.
If you're a Guardian reader, you may have seen Safe Collections' collections and partnerships manager Adam Home quoted in a Guardian Professional article on May 12th.
Tim Aldred's piece looked at the case for credit control teams as a way for businesses to safeguard their cash flow and, ultimately, to stay in business by avoiding late payment.
Adam was happy to share his ideas with Tim for the piece that you can find here: "Does your business need a credit control team?" ((c) Guardian News & Media Ltd) and we're going to expand on some of those points below.
We often warn that late payment can be more than just an inconvenience for many small firms, as the interruption to cash flow can put them at risk of failing to pay their own debts, bills and invoices - potentially leading to insolvency.
Now newly published figures from R3, the Association of Business Recovery Professionals, show the extent to which this is the case, with late payment cited as a major or primary factor in the failure of one in five companies in the past year.
Whether you're in business on your own, or part of a company, it's essential to protect your income - and one of the greatest areas of risk is when you extend a line of credit to a customer.
Remember, any time you carry out work, or provide goods or services, without taking payment upfront, you effectively become a creditor.
That means you need to think carefully about several different factors, for instance: