Sales people want to sell - after all is what they are paid to do and what they get commissioned against. Finance people are paid to bring control to a business. Not being paid for the sale you make is a pointless waste of effort and costs the business real cash. Finding the happy middle ground is the key to success and this is where your credit policy comes in.
What is it? A good credit control policy defines the process for taking on new customers, how their credit limit is set and what happens if they pay late.
What isn't it? A bat to beat sales people about the head with and hide behind taking any risk. If you grow sales you extend credit you take a risk - a good credit control policy helps you manage that risk
What should it contain? That depends on your business but here's some free credit control advice:
- introduction - what is the credit control policy meant to do
- risk management - outline how and when and why you credit risk assess customers. Who authorises credit limits? Distinguish between new and existing customers. Who makes the sales people aware of limits?
- credit control invoice chasing process. What happens with late invoice payments? When do customers go on stop and what communication takes place
- overdue balances - what is the sequence of phone calls and letters to the customer. When do you use a debt collection agency?
For those who follow our blog we are happy to send a free credit control policy template - just ask for a copy at info@octempo.com