Business credit management is not a new term. It has been practiced for decades by business owners who aim to make their companies debt-free. Also, it helps your firm enjoy a smooth cash flow.
Credit management is the process of granting credit to your customers, ensuring they pay their dues on time. It is also about setting payment terms and recovering debts.
If you’ve been in the business arena for a long time, you may have realized the consequences of late payments. Not only does it impact your cash flow, but you also end up experiencing a financial crunch sooner or later. How do you ensure that your customers don’t delay payments?
You must learn about credit management techniques and make them work in your favor. Make courtesy calls to your customers, visit them, extend payment dates if you think their concerns are genuine. You should also send digital invoices to expedite the payment settlement process.
While all this can help you recover money or stay afloat during a cash crisis, you should learn the benefits of solid credit management and why it matters.
Benefits of business credit management
Ensures uninterrupted cash flow
When you check on the cash coming in and going out, you can make better decisions concerning your business finances. Credit management plays a vital role in ensuring your business enjoys a smooth cash flow cycle.
It helps you pay your dues on time. Credit management is a broad term; therefore, it is not only about your customers paying you money timely. You are equally responsible for paying your dues on time. Besides, an uninterrupted cash flow cycle helps you pay your employees’ salaries on time.
Reduces the risk of late payments
When you know how to manage your credit, there will be fewer chances of late payments or financial fraud. If you know about the amount that your customers owe you, you can make strategies to recover it. Send digital invoices after a call to remind them about the payment. Visit them with the invoice records. All this can help you avoid late payment hassles.
Improves business credit score
Your commercial credit information report says a lot about your business ethics. You must be wondering what’s the correlation between credit management and business credit score. Well, it gets impacted by the change in your business credit report.
If your cash flow is interrupted or you go through a tiring debt collection process, you may need extra funds to run your business operations. Your credit applications get included in your company CIR. It may impact your business credit score. So, learn credit management techniques and use them to your advantage.
Faster bad debts recovery
Have you tried to recover bad debts from your business credit defaulters? It’s a tricky process. However, if you know how to manage your credit, you’re less likely to fall into this trap.
With that said, you may find yourself in such a situation. For that, you can consult with the CreditQ team. It can help you settle payments with your debtors, and you can make an informed decision before joining hands with the next client.