Once you have created your credit control policy, the next important step in the process is making sure that everyone that needs to know about it…..does!
The best place to start is with your own staff. Depending on your company this could be less than a handful of people or it could be entire departments. It is important that staff members understand the importance of the various aspects of the new policy and how it might affect them. For example, your sales team need to understand the process for new customers applying for credit so that they can advise them correctly on that they will need to do to obtain credit. Similarly, they need to understand the process of what happens when a customer does not pay on time. They need to understand their role in assisting in the recovery of that debt and at what point in the process they may be needed to step in and help. Again it helps if sales were involved in the drafting of the policy so that any concerns they might have will have been reflected in the process.
Next, your customers will need to know about your credit policy. When signing up new customers for the first time, part of that process should include a summary version (or customer version) of your policy that the customer must sign as part of the credit application process. This version should set out your expectations and customers responsibilities in exchange for being granted credit. The person signing the policy document is committing their company to comply with your policy terms, so it is important that the right person signed this document. They should be someone with the right level of responsibility and depending on the size of the company this could be anyone from the finance manager to the owner.
It is really important to make sure that all your customers know what your credit terms and policy are. Your credit policy will be essential if a dispute arises. It will clearly set out what the various responsibilities are on both sides of any dispute. It highlights what steps you will take if there is a genuine dispute with the invoice and what you will do to resolve that dispute and recover your debt. This is Key! Without this, it can weaken your position during any negotiation or discussion with your customer and some customers could potentially use this lack of clarity to their advantage. Without clear guidelines, the customer can simply plead ignorance to your process and dispute any attempt by you to recover the debt.
It is vital that you communicate your policy to everyone that it impacts!
photo credit: Negative Spaces