Why do businesses not take their credit function more seriously?
Many businesses suffer from cash flow problems. You hear small business representatives talk about the lack of funding available for cash flow when the simple answer is that the answer to most problems lie in the effective collection of the money owed to the business.
With proper training, education and support, your credit function can become the cash generating machine at the heart of your business. Never accept things as they are, always look to achieve perfection and never settle for anything less.
We have to see money in the bank as the true measure of success. Some mistakes as I see them:
Counting revenue as soon as the sale is invoiced. A sale is only a sale when it is paid for!
Not resolving queries promptly. It is not just a pile of paper in the credit control office, every dispute in reality is: An unhappy customer, A blot on your reputation, Inaccurate sales figures, overstated profit figures and you are giving your customers an excuse not to pay you.
Bad working relationships between Credit and Sales. Everyone in the business should be focused on working together to serve the customers and making sure they are happy and paying.It has to come from the top, start focusing on your cash collections. If you use this single measure to record your success, everything else falls into place.
Good credit management is good business. Can you afford to finance your own business and your customers business as well? If not maybe it is time to focus on what your credit function can offer.
Source: Declan Flood, Irish Credit Management Training