Managing Your Cashflow

5. Credit Control

An efficient credit control system speeds up your cash collection and reduces bad debt. It also saves time and demonstrates you run your business professionally.

5.1 Control how much credit you provide and to which customers. Consider using credit scoring systems and setting appropriate credit limits for all customers.

• Avoid giving any customer more credit than you could afford to lose if the sale turned into a bad debt.

5.2 Send out invoices immediately after you have supplied what the customer ordered.

• If appropriate, make a follow-up call. Confirm that all the invoice details were correct and that there will be no problem paying it by the due date.

5.3 Monitor late payments and chase them up methodically, largest debtors first.

• All businesses - and the public sector - have a legal right to charge interest on late payments. See Interest on late payments for further information.
• Using a debt collection agency, or a specialist solicitor, can be an effective method of dealing with non-payers.