Credit Control and Electronic Invoicing
The maintenance of a successful credit control system is essential for any business as the monetary triumph of a business is solely based on this system. In fact, it is shown that mismanagement of credit control and associated cash flow is one of the most prominent reasons for business ventures to fail in their early stages. With the ability to present invoices and collect payments electronically, the world of credit and monetary exchange is developing rapidly, meaning the pressure is on for businesses for implement an effective and user-friendly credit control structure.
A Successful Credit Control System
Several key features are needed to ensure the success of a credit control system, primarily, its initial setup. It is important when implementing a credit control system to ensure that a suitable portion of company employees are trained to use it. To assist, the system should be concise and easy to navigate, with a file for each customer containing their personal (or company) details. This file should include access to past and present invoices, with details of their payment status or whether they are overdue.
Electronic invoicing allows all invoices to be sent on the same day, arriving immediately with the client. This speeds up the payment process for both business and client, as the sooner the invoice reaches the customer, the sooner it should be paid. Invoicing by fax or post should be a fall-back option in the case of client preference but will clearly take longer than the electronic alternative. Payments can also be made electronically using e-billing, which would result in instant payment of the amount owed.
Avoiding late payments is an integral part of a credit control system, so entering business with customers with a bad credit history should be avoided. An electronic invoicing system should be in place to send invoices on set dates, which clients have been made aware of. This will mean they are expecting the invoice and can pay it promptly. As payments received will be acknowledged by the credit control system, the system is able to flag invoices which are overdue. It will then automatically send a reminder to the client - followed by dunning letters where necessary. At a set point of payment delays, a stop will be placed on the customer's account, meaning they will no longer be offered services. The client should be made aware of this stop.
Invoice Distribution
In many businesses, a large number of invoices will need to be sent to clients every month, with reminders or dunning letters following if necessary. The way in which a customer receives their invoice can be electronic (by e-mail) or by fax or post. Electronic invoice distribution should be built in to a credit control system, to maximize the speed at which payments can be received once an invoice has been sent.
It may be advantageous for a business to implement an early payment discount as effort to receive invoice payments as fast as possible. In business time is money, and a client delaying payment can cause hidden costs in areas such as admin.
