Running any type of small business is a tall task. You have an astounding number of things to worry about, and that is on a good day. We won’t even get into the stress that can mount on the bad days.
One thing that you don’t need to be worried about as a small business owner or operator is dealing with credit customers who fail to meet their obligations. Once those accounts go into delinquent status, the odds of your relationship with that customer ever improving pretty much go out the window.
In order to protect your business, as well as your relationships with your customers, here are six proactive credit control tips that should help you deal with minor issues before they become major ones.
Do Your Homework Before Issuing Credit
The number one way to prevent an account from heading into delinquent status is to never issue credit to that customer in the first place. In order to help you weed out the risky customers, make sure that you are doing your homework and checking their credit history before offering additional credit to them.
Send Invoices Immediately
As someone who is running a small business, you probably feel like you are responsible for more than a dozen spinning plates at any one time. This creates a situation where it can be easy to put off sending out those invoices to your clients.
But you certainly aren’t going to get paid until you send an invoice, and every day that you push back on sending it makes a bad debt situation more and more likely. So make sure that you are making those invoices a priority.
Don’t Break Your Rules for Anyone
Customers who become delinquent debtors almost always have a way of making you feel like they are your friends and that you should be bending your rules in order to help them out. This is a recipe for disaster.
You put the rules concerning your credit terms in place for a reason, so don’t ever let anyone talk you into breaking them.
Another way to help prevent delinquency issues before they start is to make sure that you are always commanding respect from the people you are issuing credit to. Being the “nice guy” is all well and good when you are at home, but if you expect to receive payments from people you are issuing credit to, you need to command their respect.
Remember Your Reminders
One of the best tips for being proactive about your credit control procedures is to put a reminder system in place that alerts your debtors of upcoming due dates BEFORE a bill or invoice comes due.
This will insure that any honest mistakes are avoided, as well as give you even more evidence and documentation should a debtor need to be taken to court.
Expect Some Debtors to Struggle
Issuing credit is always going to be a tricky business, and if you are going to play the game you should expect that you are probably going to get burned every once in a while. That’s why it is important to make sure that no one debtor could ever owe you enough to bankrupt your business should they stop making payments.