Effective credit control is one of the most important parts of running a successful company and surely every company wants to be successful! Without the cash coming in when you need it to come in, your company’s cash flow can severely be affected resulting in much bigger problems. So, CMR Insurance Services Limited would like to share their knowledge from their 25 years’ experience of both the debt recovery and credit insurance industries.

The first steps…

The first thing we suggest you do is get a credit check on your customer or if you have a credit insurance policy apply for a credit limit. It is extremely important that you know as much as you can about your customers from the moment you receive an order. If you are concerned about their creditworthiness you could restrict the credit terms you offer or impose pro forma invoices. If the client refuses then maybe it’s for the better as an order is only beneficial if you actually get paid.

What’s next

To ensure your credit control remains effective, it is recommended you invoice as soon as you possibly can stating clearly the due date of the invoice and perhaps double check they have received this. You may consider this to be overkill but this is a very worthwhile exercise with a new customer. Following on from this, a statement should be sent to your customer on the due date informing where the customer should make their payment, whether by BACS or by cheque.

No payment on due date?

If payment hasn’t been received in the next week or two it is recommended that you send a formal letter with a copy invoice and/or statement stating the account is overdue and needs to be paid, once again providing the details of how it should be paid. If after another two weeks payment or communication is still not forthcoming, a phone call followed by an email should be made to the accounts department to find out if there is an issue. You could then escalate it further by sending a stronger worded letter with copy invoices and/or statement informing how overdue the account is and how they should pay.

We’re getting nowhere…

Assuming you still haven’t received any payment, your best option would be to pass the debt to a third party debt recovery company. At CMR, we pride ourselves on our knowledge of not only credit insurance but also the debt recovery world. Our team has a very high success rate at collecting debt with the skill that does not taint your relationship with your client. The intervention of a third party cannot be under-estimated.

Credit Insurance and Debt Recovery

Our standard credit insurance policy states that overdue accounts must be notified 45 days after the due date of the first invoice that hasn’t been paid. This is when we would suggest you should employ a third party to help in recovery action. Here at CMR, we understand the importance of cash flow and keeping it positive and in your bank account – remember you are not your customers bankers. Assuming you have a managed CMR credit insurance policy with a valid credit limit, all debt collection costs, including what could be substantial legal fees (over £100) are reclaimable under your policy. This also means you have peace of mind knowing that should a customer becomes insolvent or cannot pay, a claim will be paid.

Our managed credit insurance policy works with your company to help keep you trading profitable by insuring the risk of non-payment. This adds more security to your credit control. You will be protected the whole way through. For a quick quote or just to find out more, please do not hesitate to get in contact.