Trade credit is the lifeblood of the B2B industry; much bigger than bank lending and cash transactions and most businesses rely on this form of purchasing products. However it leaves the gates open for a business to go unpaid. A business running on credit relies on the customer keeping up payments promised to them in order to maintain their own cashflow. For any business it is vital that they get paid, which is why it is worth employing an in-house professional team to handle the finances.
A credit control department will be trained and experienced in making decisions based on the benefit of the company’s finances when taking steps in new directions or doing new dealings. They will also know how to understand a credit report. Creditsafe’s credit reports are designed to be easy to understand and packed with information from official sources, however sometimes understanding the credit report is the easy part. If you’re looking at your own company credit report, the hard part could be knowing how to build a better rating, or if you are checking a potential supplier or customer credit report, you may not know what warning signs to look out for. A specialised trained credit control team will know how to get the best out of credit reports and all financial situations.
A team to handle the finances can take a lot off your plate as a business owner. Where you need to worry about the business, the customers, the marketing, the staff and another one hundred other things; finances don’t need to be one of them. It is imperative you choose the right person or team for your business with the right experience and understanding of how you want your business to be run; and you need to know you can trust them with your wishes. Having an in-house credit control team or department is always better than out sourcing them as it allows you to keep control over your finances.
Here are our top 5 reasons to have a credit control team.
- They vet potential customers. Before entering into a new contract with a new customer or supplier, your credit control team will check them beforehand. They will check their credit report, dig up past experiences and analyse their past and present payment behaviour. They will have the experience to spot any vital clues or warning signs in a credit report that an untrained eye might miss when analysing a company’s payment behaviour. Ultimately, the finance director will make the decision of whether or not the company can do business with another so they need to build a good relationships with the sales people and ensure they are on the same level when targeting new business.
- They overlook the running of all the finances. If something goes wrong with your finances, more often than not your team will spot it. If there are irregularities, unpaid bills, over paid bills or something happening that’s not supposed to be, your team should be so on top of your books that they will spot it straight away or hopefully prevent it from happening beforehand. All the money that comes in and goes out of the business should go through them, so they should be in a position to realise if something has gone wrong. They will also deal with expenses. If you have sales teams that go out on the road or have to claim expenses for any reason, your credit control team will handle this for you.
- They make sure bills are paid on time. A credit control team will know the importance of having a good reputation and being deemed creditworthy. They know what companies look for when looking to go into business with another, and being a good payer is one of them. Your credit control team will make sure all your bills are paid on time, to the right people, for the correct amount. They also deal with all the people who will be chasing up payment prior to the due date so you don’t have to.
- They will chase unpaid bills. On the other hand, they will also chase any bills that haven’t been paid to you, and they will do it professionally. They will know the best ways to chase debt and the legal proceedings of doing so. They will also have all past and present correspondence and contracts with companies that owe you money, meaning they have all the evidence they need to chase payment and there is no confusion between departments that could delay the debt being paid to you. Having someone on the team solely responsible for chasing unpaid bills makes the process so much easier as everything can be recorded, correspondence can be monitored by the same person and it causes less confusion for both parties.
- They understand the importance of credit checking and credit reports. A credit control team won’t just take a chance on a business and hope they pay you on time. They will examine a company’s credit report and analyse their whole financial situation; from the company’s payment history, credit limit, debt, turnover, and more. They will also check director details and run things like AML checks on the company. They are specialists in the field of financing and understand all the obstacles that can be involved in doing business.
So if you’re a business and thinking of adding a credit control team to your company, there are five great reasons why you should above. A business owner will have so many things to deal with when running a company that it is possible to let bills slip, therefore a team of trained credit controllers could be the way forward for you.