Improve Your Chances of Successfully Navigating the Recession

Its official, the recession finally hit.

Many companies neglect to recognise how important their credit control department’s role is, especially in times such as these. Directors must recognise that prevention is the best cure for bad and delinquent debt.

During such difficult financial times, where companies find themselves having to streamline their businesses, making redundancies and cut backs, reducing numbers in credit control departments during such volatile times could prove to be commercial suicide.

We all know that it is getting more and more difficult to secure payment to terms, as cash gets tighter due to lower sales and profit margins, more companies are extending their creditors to relieve their cash flow. Your credit control department needs to increase productivity and make more outgoing calls. It is more important than ever that they are calling clients before the invoice falls due to prevent queries at due date. They need to be more vigilant when reviewing their aged debtors, any debt older then 60 days over terms is a potential bad debt.

Make sure your credit controllers are aware of legislation in your favour 'Late Payment of Commercial Debt regulations 2002'. You should use this legislation to promote to your clients that you mean business and that late payment will be met with penalties.

PCS offer a free consultation of your credit control function, which includes identifying your credit controller’s needs for training, review your dunning letter cycles and content, and provide you with an in depth needs analysis of what you need to do to improve your chances of being paid first.

Don’t be afraid to outsource bad and delinquent debt
A good debt collection agency can improve your cash flow and help reduce your DSO’s. The introduction of a third party into the collection process makes those clients who are used to your collection procedure, and who ignore your normal attempts of collection, sit up and listen. They take your debt more seriously and most debt collection agencies apply a lot more continuous pressure to your clients to retrieve your debt.

PCS work on a 'no collection, no fee' approach

This is an additional resource, which if used properly, increases the strength of your own credit control department. PCS will help you collect debts which you may have normally relied on collecting through the county court, which we all know can be a long protracted process due to the work loads the courts are currently dealing with.

Companies need to be doing all they can to avoid bad debts

Is your company carrying out the necessary credit checks when opening new accounts and offering credit terms? Credit insurance companies are setting new criteria for insurance cover, therefore, you could lose your ability to set discretional limits if you are not taking regular credit checks to prove that the internal limit you have set for your client is up to date.

Let’s all hope that the recession dissipates quickly and that the economy returns to normal but in the interim period, protect your hard earned sales by improving your credit control.

Barry Kirkwood - PCS Credit Management
0161 941 7511
bkirkwood@pcscredit.co.uk