Stop Spinning Plates: Why Businesses Need Credit Control
1st March 2021
When it comes to discussing finance, it’s fair to say many people’s eyes glaze over and their minds drift off (not ours, we love finance!), so it’s understandable that the importance of credit control often slips under the radar.
If we delve into credit control’s crucial role in business however, we can begin to understand what they do - and why now is the perfect time to hire one.
What is Credit Control?
Credit control is the process used by a business to manage debts owed by customers and ensure that these payments are received on time. When effectively implemented, credit control is critical in managing the cash flow of a business, ensuring it can run smoothly and profitably.
Credit controllers aren’t just number-crunching debt-collectors, primed to bash a customer’s door down if they don’t pay on time, though. Credit control is about carefully managing systems and processes alongside creating customer rapport in order to build excellent relationships.
This means a credit controller must have knowledge of the customer’s processes and approval systems, ensuring invoices are up to scratch to ensure smooth payment. They also need to be keenly aware of assessing risk in order to only give credit to customers who are able to pay, whilst keeping a sharp eye out for signs a business may be in financial distress and adjusting credit limits accordingly.
And when having to deal with the awkwardness of enforcing overdue invoices, a tactful yet firm approach is required.
Why is Credit Control Important for a Business?
If cash doesn’t move smoothly, businesses can run into serious trouble pretty quickly.
Weak credit control can hinder a company’s ability to pay employees, for example, whilst extended cash flow problems can ultimately lead to business failure.
In fact, bad debt and cash flow issues are often cited as the two main reasons most small businesses fail.
Debt management can end being a precarious act of spinning plates. Improving your process with the help of a good credit controller can release important cash flow into your business and helps you to avoid unwanted nasties like paying interest on overdrafts and invoice discounting. The strong cashflow coming from good credit control will also help your own credit terms with suppliers.
On top of all this, chasing up outstanding debts can be a time-gobbling, frustrating and awkward process, so having this aspect of your business expertly managed will free up time to be spent much more productively.
This is how not to do credit control
Why is now the time to improve your credit control?
The coronavirus pandemic has, of course, disrupted businesses immensely. When you look to sectors such as hospitality and live entertainment in particular, it’s easy to imagine how the best part of a year of closures will have wreaked havoc on the ecosystem of businesses, freelancers, suppliers and the related cash flows.
In these circumstances, customer debt could quite easily start to spiral out of control without a firm strategy and the expertise to implement proper credit control.
How can Harmonic help to reduce the stress of your first hire?
A complex, multi-faceted role like this, which can have such a strong impact on business success and profitability, means you need to find experienced, finance-savvy candidates who can build excellent relationships. This is where our expertise comes into play.
We’re specialists in finance head-hunting. It’s our bread and butter, so you can trust us to unearth the very best talents. Finding the right person for such technically challenging roles isn’t a simple task: we thoroughly vet all our candidates to make sure they fit the profile that you’re looking for.
We also pay close attention to the culture of your business as we pride ourselves on finding candidates that are an excellent fit. Having technical expertise is important, but it needs to be paired with an understanding of your business’ ethos and personality.
Take the stress out of your first credit control hire and get in touch today.