We’d be nothing without our teams. Running a HR business involves more than just providing excellent HR services to our clients, there’s a lot more going on behind the scenes. In this series of blogs, our team will be talking about their practical tips for responsibilities outside of HR.
This week our Office Manager Tracy Bennett will be sharing how she’s cracked the code to Credit Control, and how you can too!
I remember when I first told my old boss that my current employer had asked me to take over the daily credit control and purchase ledger for the business. He actually laughed! You see, I had never seen myself as someone who was good with numbers (and it looks like I wasn’t the only one). Don’t get me wrong, I’m pretty good with a spreadsheet and I’ve never had any trouble with basic mathematics, but a job that involved accounts was quite daunting and not something I had ever considered doing. However, I quickly realised that the main attributes I needed for the task were:
- Building a good rapport with clients
- a bit of a stubborn streak
- a dogged determination
Lucky for me, I could tick all of the above boxes. I agreed to take it on and I haven’t looked back since.
The first thing I did was to set myself a goal to reduce the company debt by half within two years. I do like a challenge and I needed something to work towards. I actually managed to reach my goal earlier than anticipated – at one point, I even managed to reduce it by 75% of the original aged debt I inherited. Of course, it would be unrealistic to expect to eliminate all debt all of the time, but I continue to keep it to as much of a bare minimum as I can.
So, how do I do it? Here are a few hints and tips I have learned for myself over time:
- Have a signed contract in place before you start providing work – be clear on the cost and payment terms.
- Encourage existing retainer clients to sign up to direct debit payments and include it as part of your T&C’s so that new retainer clients agree to pay by direct debit when they sign your contract. I use GoCardless for direct debit payments.
- Act quickly. If your credit terms are 14 days and the client hasn’t paid by day 15 then send them a friendly reminder. This is especially important with new and one-off clients.
- Keep in regular contact with the client by telephone and email – gently let them know you are not going to let the debt slide.
- Ask questions. Find out what the issue is and offer a mutually acceptable solution (this may include payment instalments or extending the credit terms on a temporary basis).
- Remind your client of the terms and conditions they agreed to.
- If the client is refusing to pay because they have an issue with the work/service provided, make sure you find out exactly what the problem is so that you are able to come to a solution that they are happy with.
- Have a standard process for chasing the debt, allowing for a reasonable time in between each step. Set up standard template letters so you have these ready to use. I have three, the last of which is a final demand letter (although I do use my gut feel with this process as I have got to know the regular offenders over the years and don’t want to alienate them by sending them final demands).
- If someone else in the business has a good relationship with the client, ask them to speak to the client too.
The most important tip I can give is that you get to know the clients. You will get to recognise when they are experiencing problems that may affect their ability to pay you and you can act quickly to avoid any potential missed payments, or at least minimise the amount of debt likely to occur. Some of them will pay at a certain time every month, no matter what your T&C’s are, some will pay three months’ worth of invoices in one go and then wait another three months to do the same again. You get to know the repeat offenders. I still keep in regular contact though – you never know when their situation might change and you don’t want to find out three months’ down the line that they can’t pay.
If all else fails, you can use the Government Gateway Moneyclaim Online service. You need to be able to demonstrate that you have tried to settle this matter prior to using the service, which is where your written records will come in handy (emails, letters, etc.). Or as a last resort – and if the debt is big enough – you could employ a debt collector.
I remain mindful that all businesses operate differently and my experiences are based on working for a small company providing a service to a mix of mainly retained clients and some ad-hoc clients too. However, I do hope some of my tips help you keep those debts to a minimum. Be persistent, be polite, but be firm.
Want to work with Tracy and the rest of our wonderful team? Simply give us a call on 03300 414589, visit our contact us page or drop us an email at firstname.lastname@example.org to arrange a conversation.
DISCLAIMER: The article is provided for general information purposes only and does not constitute legal or other professional advice. While the information is considered to be true and correct at the date of publication, changes in circumstances may impact the accuracy and validity of the information. EffectiveHRM is not responsible for any errors or omissions, or for any action or decision taken as a result of using the guidance.