The summer months can present unique challenges and opportunities for the credit control function within a business. Here’s a detailed look at what to expect and how to manage credit control effectively during this period:

Challenges

  1. Seasonal Slowdowns:
    • Reduced Business Activity: Many businesses experience a slowdown during the summer due to holidays and vacations. This can lead to delayed payments and slower responses from customers.
    • Lower Cash Flow: With reduced sales and potential delays in receivables, cash flow can become tighter during the summer months.
  2. Staff Vacations:
    • Reduced Workforce: Key credit control staff may be on vacation, leading to a temporary reduction in manpower. This can affect the efficiency of the credit control process.
    • Continuity Issues: Ensuring that credit control activities continue seamlessly despite staff absences can be challenging.
  3. Customer Unavailability:
    • Delayed Payments: Customers may be unavailable or slower to respond due to their own vacations, leading to delays in payment processing.
    • Communication Gaps: Establishing and maintaining contact with key decision-makers in customer organizations can be more difficult.

 

Opportunities

  1. Process Optimization:
    • Review and Improve Procedures: Use the quieter period to review existing credit control procedures and identify areas for improvement.
    • Training and Development: This is a good time to train staff and update them on new credit control techniques and technologies.
  2. Building Relationships:
    • Customer Engagement: With potentially less hectic schedules, take the opportunity to strengthen relationships with customers. Regular check-ins and personalized communication can reinforce customer loyalty and prompt timely payments.
    • Negotiation of Payment Terms: Engage with customers to renegotiate payment terms that could benefit both parties, such as discounts for early payments or extended payment plans for reliable customers facing temporary cash flow issues.

 

Strategies for Effective Credit Control in Summer

  1. Proactive Planning:
    • Early Invoicing: Send invoices earlier to account for potential delays. Follow up promptly and consistently to ensure payments are made on time.
    • Payment Reminders: Implement automated payment reminders to keep customers informed about upcoming due dates and overdue invoices.
  2. Staff Management:
    • Cross-Training: Ensure that multiple team members are trained in credit control tasks to cover for each other during vacations.
    • Temporary Staff: Consider hiring temporary staff or outsourcing to maintain credit control functions without disruption.
  3. Enhanced Communication:
    • Regular Updates: Keep in regular contact with customers to understand their schedules and any potential delays in payment. This proactive approach can help in planning and mitigating risks.
    • Flexibility: Be flexible and understanding of customers’ situations. Offering alternative payment options can help maintain good relationships and ensure cash flow.
  4. Technology Utilization:
    • Automated Systems: Utilize credit control software to automate routine tasks, such as sending reminders and tracking payments. This can help maintain efficiency even with reduced staff.
    • Online Payment Options: Encourage customers to use online payment methods for faster and more reliable transactions.

 

Monitoring and Reporting

  • Regular Review: Monitor key performance indicators (KPIs) such as days sales outstanding (DSO), aged debtors, and collection rates. Regular reviews help identify issues early and take corrective action.
  • Detailed Reporting: Provide detailed reports to senior management on the status of receivables and cash flow, highlighting any potential risks and proposed mitigation strategies.

By anticipating the challenges and leveraging the opportunities presented by the summer months, businesses can maintain effective credit control and ensure continued financial health and stability.

 

Outsourcing your credit control is a sure-fire way to prevent your business’ finances from suffering today, tomorrow, and beyond. Call us at 01492 22742 or email [email protected] to find out how we can help you.

 

 

 

Published 11/06/24