Credit management is essential for any business as it ensures enough working capital to maintain its day-to-day activities. Credit management is a time-consuming and complex task. No company wants to spend too much of its valuable resources and time on it. Following basic credit management exercises consistently can help you manage your credit.
Here are some business credit management tasks you can do in a few minutes to maintain your cash flow.
- Review your sales ledger
Checking every sale can feel like a cumbersome task. However, there are many benefits of checking your sales ledger every morning before starting your day. Doing so can help you identify any customers who are missing the payment deadlines or nearing them. It lets you know which customers you need to target for debt collection. And whom to send payment reminders.
- Reach out to your customers
When you review your ledger, you will get a list of customers in the credit period. You can send reminders to these customers at different intervals of the credit period of their due payments. It can motivate a few of them to pay before the invoice becomes due. If some customers have delayed payments as they have forgotten about them, your call can act as a reminder, and they can make the payment.
- Review your invoices
Another easy task that can help you minimize late payments include reviewing and making changes to your invoice. When you check your invoice, look at it from a customer’s viewpoint and consider whether there are too many complexities. If you find it hard to understand in one go, your customer would surely do. Simplify the invoice to make it easy to comprehend verify.
- Credit check your existing customers
Most companies are now checking the business credit scores of their customers before doing business with them. However, very few companies go through the rouble of credit checking their existing customers. Having such blind trust can lead you to trouble when there is a crisis, and your existing funds are finished. So, credit check your current suppliers and customers using CreditQ’s business credit information report.
- Join a credit circle
Credit circles are a great way of knowing more about the recent credit trends and your creditors. Join a credit circle that caters to your industry and quickly stay updated about what’s happening with your creditors. CreditQ is one such B2B solutions platform you can join to know more about your customer’s credit standing.
- Focus on your aged debts
When chasing late invoices, start with the oldest and highest paying invoices, as getting them paid can improve your cash flow significantly. It also helps you prioritize and focus on one task at hand rather than running in all directions.
If you feel that these invoices are taking too much of your time and resources and you are not getting desired results, you can hire B2B credit management services to recover them for you.
Doing so takes the complex takes out of your hands to the experts who ensure that there are no defaulters. You can get a debt collection quote from the service providers to know whether it would cost you too much to hire their services.
- Send a letter of action
A letter of action is a final reminder to payment defaulters to pay their invoices before a set timeline to avoid any legal consequences. Such letters can ruin your business relationship with your customer, so you must send them only as a last resort.
CreditQ is an all-in-one credit management platform like CIMSME India designed to help MSMEs in India to manage their credit. Our unique platform enables you to report your payment defaulters, check business credit scores, and settle payments quickly.