Gude to Credit Control

Rule 1: A sale is not a sale until the money is in the bank.

"For many companies the long awaited big order is the whole reason to be in business.  However, whether your customer is a small business or a very large one, it is critically important to ensure they can and will pay you.

Woolworths Group Plc was a massive business and a household name employing thousands of people and turning over hundreds of millions. When it finally succumbed to market pressures many of it’s creditors were left with nothing.  No stock, no payment and scant likelihood of any payment from the liquidators.

Ethel Austin a more recent example of a company placed into Administration, thus protecting itself from the actions of creditors.

Always remember:

Before you commit yourself to a credit transaction and permit your buyer to receive goods or services prior to payment, you must be completely confident that you have made a wise investment, as that is precisely what you are doing! You are investing your time and effort into their or their client's company!

You must be well placed to receive prompt and full payment for same, a few simple steps may ensure a harmonious and mutually profitable relationship.

Consider this…

You are approached in the street by an old and trusted friend who has had his wallet stolen. He needs £50 to get home.

You are approached by a down at heel but well spoken stranger, who informs you that he has had the misfortune to have been relieved of his wallet. He assures you that if you provide him with a loan of £50 together with your name and address, he will return the money at the earliest opportunity...

To whom would you extend credit?

Who in their right mind would hand over £50 to a total stranger? Unbelievable as it may seem, this is a situation which is encountered in the business world day after day, when supposedly astute businessmen cheerfully consign thousands of pounds worth of goods or services to clients about whom they know absolutely nothing or to whom they have applied the very flimsiest methods of credit assessment.

Indeed, the most curious criteria are often employed in assigning credit worthiness:

  • They’ll be O.K. After all, they are a limited company/PLC.

  • We’ve heard they’re doing really well.

  • They’re massive.

  • They’re a household name.

  • They’re part of a huge group.

  • Just look at their prestige address - even the building is called after them.

Hearsay and casual observation is not sufficient.