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Credit Management Advice > Credit Healthcheck

Credit Healthcheck

The first step to successful credit management is getting the right procedures in place. Remember, an order is not a sale until it is paid for. Please take ten minutes to print off and fill in this questionnaire. While by no means exhaustive, it will help you re-examine your own procedures and practices.
Section One. Order stage Always Occasionally Never
Do you make a credit check on each new customer?      
Do you set a credit limit for each new customer?      
Do you conduct regular credit checks on your main customers?      
Do you have fully documented Terms Of Trade?      
Do you agree Terms of Trade in writing?      
Do you always try to use your own standard terms of trade?      
Do you give each customer a unique account number?      
Do you confirm the following details:      
Identity of the company/individual you are trading with      
Contact address      
Phone/fax number/e-mail      
Company VAT number      
Company registration number (if Limited)      
Do you record the date when payments are due?      
Do you find out when your customers normally pay their bills?      
Do you specify the most appropriate payment method (cheque or electronic payment)?      
Factoring and Credit Insurance can help you control your cashflow. For more information contact the Factors and Discounters Association on 020 8332 9955 and the Association of British Insurers on 020 7600 3333.      
Section Two.Invoicing Always Occasionally Never
Do you check the accuracy of all invoices sent out?      
Do you include the following on all invoices:      
Terms and conditions of sale      
Name of the organisation you are trading with      
Address for payment      
Order number      
Order description      
Delivery date      
Unit Price      
VAT number, amount and rate      
Total amount due      
Due date for payment      
Payment terms      
Discounts given      
Do you issue an invoice within 24 hours of delivery of the goods or service?      
Do you check that your delivery is in line with the order to avoid invoice disputes?      
Do you confirm receipt of invoice for large accounts?      
Do you issue monthly statements of account showing invoices paid and still outstanding?      
Did you know that, in most cases, 20% of customers account for 80% of turnover? Find out who your 20% are and keep particular track of them.      
Section Three. Collection Always Occasionally Never
Do you know when each debt is due?      
Do you phone major accounts before due dates of payment to ensure there are no
disputes and that the way is clear for payment to be made on time?		      
Do you chase overdue payment within a week of them being due?      
Do you conduct an aged debt analysis each week?      
Do you prioritise your collection activity and chase the highest values first?      
Do you use a set policy for further chasing, for example, standard letters, visits, calls, faxes, when referring to solicitors or a debt collection agency?      
For information on how to select a suitable collection agency contact the CSA ( Credit Services Association) for their booklet and their list of members. Telephone: 0191 2132509, Fax: 0191 2845431 or visit the website at www.csa-uk.com      
Are you aware of the Statutory Right to Interest on Late Payment? Call 0870 150 2500 for an information booklet.      
Section Four. Recovery Always Occasionally Never
Do you always stop supplying when payment has not been made by a set time past the due date?      
Do you put the matter in the hands of a solicitor or debt collection agency?      
Do you pursue the claim through the courts?      
Get a copy of 'Small Business - A Guide to Debt Recovery' by calling The Court Service on 020 7210 1775      
Section Five. Management Always Occasionally Never
Do you have documented procedures including timescales for handling and resolving disputes?      
Do you use any system for measuring the success of your credit control function?      
Do you have a regular monthly review to identify problem accounts and define courses of action?      
How did you fair? Always Total Occasionally Total Never Total
If you haven't answered 'always' or 'yes' for at least 75% of the questions then think about your credit management practices carefully.      

Looking for more indepth advice?
The ICM, the largest professional credit management organisation in Europe, is running over 100 conferences, seminars and workshops across the country next year. They can also design and run tailored in-house courses to cater for specific needs.
To obtain details, click on the website address www.icm.org.uk or telephone 01780 722907.

The CSA (Credit Services Association) have provided a booklet on the effective use of debt recovery agencies. For a copy of this booklet telephone: 0191 2132509, fax: 0191 2845431 or visit the website www.csa-uk.com.

 

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