Behind every successful organisation you will find a strong credit management team
You know the drill: you have to call a customer because your invoice is not yet paid and is (getting) overdue. Various scenarios are going around in your head such as: "Do they have enough liquid assets?" and "What excuse am I going to hear now?" or "How are they going to react when I remind them? Angry? Annoyed?".
When you think of credit management and more specific debt & credit control, it is immediately associated with something negative. This is because you need to remind people to pay - and let's face it - paying is the last thing on our want-to-do list.
Therefore, the following 5 tips to keep your credit control light-hearted, fun and professional, immediately applicable in your credit management strategy.
Tip 1 - Look in the mirror first
Before you contact the customer, check whether you have indeed sent the invoice through the desired channel and check whether there are any "special" payment conditions.
Also verify that you have used the correct invoicing data. Here, a business information provider, such as Creditsafe, can certainly help you because we have the correct and up-to-date company information data. If you have checked this, it is certainly advisable to also consult the latest company credit report for any critical information you've missed.
Furthermore, it is also advisable to check the order form and to contact the relevant salesperson about any special or exceptional agreements made with the customer that the credit management (or credit control) is not aware of.
Have you done the above?
Great, now you can confidently approach the customer yourself.
Tip 2 - Kindness in words builds trust
Logic, and yet the standard!
Whether by telephone or by e-mail, the contact with your debtor should be friendly. Don't be too formal either, because that makes the whole thing boring, monotonous and you will lose the customer's attention.
Be clear and to the point, by mentioning that you believe that the invoice has not been paid yet and you wonder why. In most cases, the customer is unaware of the problem. After you have contacted him or her in a friendly (human) way, payment usually follows.
Kindness, by the way, includes interest.
After you have asked the question about when the invoice will be paid, you can also talk about their business. It is important for your credit management to understand how your customer's organisation works. In this way, your credit control team will also form a better understanding of their payment policy, strategy and conditions.
This certainly will generate the necessary amount of goodwill.
Tip 3 - Automate payment reminders and send them - always
Is the invoice expired? Make it easy on yourself and ensure the communication flow to your customers.
It is an important fact that, in your credit management strategy, the credit control is a part of the customer journey. this part should also be transparently explained to the customers in advance by means of the customer onboarding, the payment conditions and the general terms and conditions.
In the event of late payment, we always start by sending a reminder, which is logical of course. What sometimes gets forgotten is the fact that when sending reminders, a copy of the invoice must always be present. We all have forgotten to pay an invoice from time to time. Maybe because we even lost the invoice between our pile of paperwork. Therefore, a wait-and-see attitude is actually a sin.
Also, make the reminder sent personal, original and light-hearted. This could be a nice e-mail like: "Oh dear, is our invoice somewhere between your paperwork?". The chance that such communications are read (and processed) is much greater than the standard reminder. As already mentioned, you always send a digital copy of the invoice with each reminder. That way, you will not have any problems afterwards with the fact that the customer cannot find the invoice.
Is it a recognised bad debtor?
Then don't wait too long to send payment reminders. We even recommend a proactive approach, even before the due date of the invoice has expired.
An efficient credit management ledger solution, (such as the 3D Ledger from Creditsafe) ensures that you can react much faster in case of imminent bad debts and write-offs due to impending bankruptcies.
As already mentioned, the customer journey is an important element. In order to let this workflow run efficiently, automation of various credit management processes is definitely recommended. There are various credit management tools that can support you in this, for example, by sending automated reminders based on different time periods and credit risk data.
Creditsafe can also support you in this by integrating its company credit risk data directly into your CRM or ERP software, so that you always have the latest risk indications and the right company information data.
Tip 4 - A follow-up by telephone is really necessary
Many people have a kind of built-in fear of using the telephone. We can only point out that it is necessary. Remember, at the end of the day, the phone is your fastest money-making tool.
A reminder is just a reminder. The same goes for an e-mail. But by also phoning in, you make the conversation much more personal, you are already more concise, you are aware of what is going on and you can even focus (with specific actions) on the solution.
With every telephone conversation, keep tip 1 in mind and be to the point and complete!
Finally, after each call you should actually send a small follow-up e-mail of the conversation along with, indeed, a copy of the invoice.
Tip 5 - Credit Control actually starts from the prospection phase
Prevention is always better than the cure and what many people do not realise is that the credit management strategy already starts from the prospecting phase.
With the help of a credit check or a credit report for each new customer, a sales representative can check whether there are sufficient liquid assets and whether the company is creditworthy. So before doing business with a company, it is always best to check with whom you are doing business and whether they are solvent.
A credit report is a useful tool for assessing the credit rating and payment capacity. Such a report gives you a credit risk indication as to whether this (future) customer will be able to pay in time (or even not, in some cases). With the help of this analysis, you can also communicate the payment term and conditions during the quotation negotiation of the customer. In this way, the customer is also aware of what he or she must do if they decide to become a customer. The customer will appreciate this because you have communicated transparently at an early stage, as part of that important customer journey and experience.
By the way, did you know that Creditsafe predicts 82% of bankruptcies 12 months before the company becomes insolvent in Belgium and 70% for international companies?
Sales and Marketing also depend on qualitative company data to support them in their commercial goals. Since we help companies change the way they do business, we can easily support these departments with pre-qualified intelligent sales leads based on their requirements. We can also ensure that the consolidation between sales and finance is easily bridged by further filtering these sales leads for credit-worthy prospects, ensuring sufficient certainty of payment.
In the end, a customer is only a real customer when payment has been done. In return for your delivery of services, there is a payment. That is the normal course and balance of business. If the customer does not pay, the balance is lost. Yet we are always looking for a balance, aren't we? It is your money, to which you are entitled. So why should you adopt a wait-and-see attitude in order to receive your payment on time?
With the help of these 5 tips, you can give your credit management strategy and credit control a good boost in the right direction.