Could you do more with your credit control time?

01/04/2015

Whenever the issue of late payment is brought up, the emphasis is often placed on the impact this is having on the country’s smallest businesses.

Generally speaking, those at the lower end of the spectrum are indeed bearing the brunt of it, with our research discovering that those turning over less than £500,000 are being made to wait an average of 25 days beyond agreed credit terms to be paid by their customers. This compares to a 19 day delay amongst those with a turnover of more than £3 million, and a national average of 22 days.

When we delved deeper into the data, however, we found it interesting to discover that this disparity comes despite the smallest businesses spending the most time on credit control per customer each week. Here’s what we found:

Turnover	Time spent on credit control per customer week	Success-based fee
Less than £500,000	15 mins 18 secs	25 days
£500,000 – £1 million	8 mins 54 secs	22 days
£1 million – £3 million	5 mins	23 days
More than £3 million	6 mins 36 secs	19 days

 

So why are the companies who are spending the most amount of time on credit control per customer experiencing the longest delay in payment?

We believe there are two main reasons for this. The first comes down to expertise. Larger businesses, for instance, will have dedicated credit controllers with years of experience and knowledge when it comes to credit management. At smaller companies, however, credit control will often fall under the remit of an employee whose primary responsibilities lie elsewhere.

The second, and more pertinent, is how a business spends its time. It’s not enough to just be in contact with customers – it’s how you’re in contact with them that will invariably make the difference. And whilst larger businesses typically have the software and processes in place to automate much of the credit control process, for smaller firms it can be a much more manual and labour intensive task. You can find some tips to improve your credit control in this eBook.

This makes it even more important for smaller businesses to ensure that they have the right team behind them when it comes to credit control. How experienced are your staff? Do you even have staff in place who can take ownership of the credit management process and therefore the responsibility of recovering payments on time? When were they last given training? And do they have the right level of infrastructure behind them to make their jobs easier?

With cash flow of utmost importance, addressing these issues and investing in your credit control now could be integral to your business’s success going forward. Take a look at your performance and identify where improvements could be made, and then how to go about making these improvements.

If you’re concerned about your credit control performance, or would like to remove the burden from your business, contact Hilton-Baird Collection Services today on 0800 9774848 or email collections@hiltonbaird.co.uk to find out how our award-winning team could help.