Topics: Accounts Receivable Process

12 Tips to Optimise Your Credit Control Function

Posted on August 23, 2021
Written By Rukmani Krishna

12 Tips to Optimise Your Credit Control Function

For businesses across the UK, late payments are a serious problem. In fact, £23.4 billion worth of late invoices are owed to firms across Britain in 2021. Although businesses understand the importance of good cash flow, many still struggle with issues such as bad debts, aged debtors, long payment terms, constant credit extensions, and poor money management.

A systematic and well-planned credit control function can significantly work to your benefit. It can help increase revenues, reduce bad debts, and improve cash flow. So, to help you better manage your credit control function, we’ve compiled a list of 12 best practices that your accounting team should implement to build a super-efficient credit control function.

1) Get the commercial relationship right in the first go: Gaining new customers can be an exciting time for your business as it grows. However, it’s important to match with the right customer. If a customer regularly owes your business money and is constantly behind or late on payments, then they are not a good match for your business. Instead, focus on building a trusted relationship with customers who are regular and prompt with their payments.

2) Always run a risk assessment on new and existing customers: A proper risk analysis is a must before doing business with any customer. This will enable you to know what their credit score is and whether they can be prompt with their bill payments. You can utilise a professional risk analysis tool to check your customers’ risk band prior to agreeing on your payment terms. The right terms can lead to a healthy and long-lasting relationship with your customer.

Just like you run a risk assessment on new customers, it’s equally important to do so on existing customers at regular intervals. You can reward customers who are timely with their payment – or whose credit score has improved over time – with more generous payment terms. On the flip side, if there’s a decline in the credit score of an existing customer, it’s a good idea to adjust your payment terms, so as to avoid putting your business at risk.

3) Develop solid credit terms: It’s important to provide clear and detailed terms and conditions for offering customer credit. When sharing these details, ensure that your customers have a copy of their own that is up-to-date, signed, and dated. Remember, your terms and conditions document is legally binding and will dictate the effectiveness of collecting outstanding money by your legal team.

4) Gain in-depth understanding of your payment process: It’s crucial that your business establishes a systematic and transparent process for invoicing and collecting payments. Your invoices and statements should be accurate; and must include relevant information, such as banking details, payment terms, copies of invoices if applicable, and due dates.

It’s also crucial to decide on the frequency of sending invoices and payment reminders. You should also decide on the medium for sending payment reminders, whether it is through SMS, emails, or phone calls. You also need to establish a process for collecting overdue and outstanding payments. Lastly, offer customers a variety of payment options in order to establish a seamless payment experience.

5) Establish an upper credit limit for each customer: It’s a good idea to set upper credit limits that are customised for each customer. In order to decide on the limit, you can conduct research, get references from other companies who they’ve worked/traded with, and perform credit checks.

6) Offer incentives for early payment: Your business is more likely to get paid faster if you offer incentives for early payments. Some examples of incentives include discounts for early payments and better payment terms for customers who always pay on time.

7) Send payment reminders a week before the due date: This practice will help you avoid late payments, especially when the due date coincides with a holiday. Additionally, you can set up automated payment reminder emails, monthly statements, and ‘thank you’ emails that should be sent on specific days both before and after a payment is due.

8) Meticulously track payments and keep records: It’s crucial that you keep records of customer communication related to payments. Accurate and detailed record keeping will lead to effective credit control. This will make it easier for your team to resolve customer queries and also make sure that you have access to the correct information and documents in case of disputes.

9) Be proactive and not reactive: Late payments can still occur even if you make every effort to avoid it. In such instances, it’s important to have a strategy in place to get paid as soon as possible.

Some methods that you can use include:

– Sending automated reminders if no payment is made post the due date

– Highlighting payment dates and specifying late fees in the email body

– Including links to the original invoice in all emails

– Escalating non-payment after a set date to top management

Don’t forget to tighten your credit control processes to stop customers from taking advantage of any small loophole. Constantly monitor risky accounts and follow a collection procedure immediately if you find an outstanding invoice. Faster follow-ups lead to quicker payment collections.

10) Automate your credit control function: You might already know that automation offers several benefits for a finance function like credit control. Not only will it save time, money, and increase accuracy, automation will also help with streamlining credit control processes. An automated system will record and store up-to-date, error-free information regarding your invoices and statements. It will also share these with customers at a quicker pace, thereby enabling faster payments.

11) Strive to achieve single view of debt: This powerful tool enables a holistic approach towards debt recovery through a 360-degree view of each client, integrating customer data held by an organisation. This method can be used by a business to gather all customer and prospect data that can then be merged into a single, unified record. The single view of debt both enables individual debtors to pay off their arrears in a manner that suits their current situation or circumstance and helps the business with cash flows.

12) Establish a good customer relationship: It’s vital that you share a good relationship with your customers as this will help them trust and open up to you in case any issues arise. A missed or late payment once doesn’t imply that a customer is bad. When you maintain a friendly and professional relationship with your customers, you are more likely to retain them instead of handing them off to debt collectors.


A healthy cash flow and fewer debtors are two main goals for any business. So, it’s only expected that a business works towards better credit control management to achieve these goals. By adopting some of these best practices for credit control management, your business will be able to improve its cash flow, make its processes more efficient, and deliver a superior customer experience.

Are you on the lookout for a sourcing partner who can help optimise your credit control function? QX can support your credit control transformation initiatives.

Learn how QX transformed the credit control function for one of the leading recruitment businesses here.

Speak with our experts today to get a customised credit control solution for your specific organisational needs.

Originally published Aug 23, 2021 02:08:52, updated Dec 07 2021

Topics: Accounts Receivable Process

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