What is Credit Control in a Company?

Credit control is an important term that is frequently used in the world of business, but what exactly is it?  Well, let’s delve in and find out…

When you sell goods or provide a service, it may be your policy to request full payment at the point of sale and this is a very safe option.  However, if you are looking to attract new customers and increase your business turnover, then you may have decided to extend credit to your customers. 

Extending credit to someone can be risky, particularly if you have had no prior dealings with that person.  By giving your customers greater flexibility and allowing them to spread the cost of their purchases over a specified period, you run the risk of your business encountering “bad debtors”.  It is vital, therefore, that the terms of any borrowing are clearly outlined in a credit agreement, to be signed by both parties prior to the transaction taking place.

Managing the risks

Whilst offering credit to your customers is not without risk, there are steps you can take to manage the risks that may arise when you extend credit, including:
  • Assessing the customer’s level of risk by running a credit history check.
  • Setting credit limits – you may choose to offer less credit to new customers, but more to existing customers.
  • Drawing up a credit agreement with the terms clearly laid out. This agreement should be signed by the customer and a copy given for their records.
  • Monitoring all customer account activity closely.

The important role of a credit controller

Responsibility for credit control should sit with a knowledgeable and experienced credit controller, either inside or outside your company.  Large companies will often have a credit control team based within their finance department, but this may not be the case for small-to-medium sized businesses. If you are extending credit to your customers, then having one or more credit controllers in post will ensure you have good insight into what is owing to your business at all times.

Whether an employee or third-party person, your credit controller will be responsible for implementing your company credit control policy and liaising with any debtors on matters relating to their credit agreement.

At Jackson CRS, we have supported many small organisations with their credit control and have a proven track record for success when it comes to recovering outstanding debts from poor borrowers. 

The bottom line

To summarise, credit control is merely the term used to describe the processes and strategies your company uses to manage the risks associated with extending credit to customers and recovering any outstanding sums. 

By implementing and adhering to a robust credit control policy, you can manage your debtors effectively, whilst enjoying more sales opportunities in return.

Remember that credit control is an ongoing activity that should be overseen by an experienced credit controller, so that any potential problems can be identified and rectified at the earliest opportunity.  This important role can be undertaken either by a person employed by the company or, alternatively, the work can be outsourced to a credit control agency, like Jackson CRS.

Contact Us

If you would like to put your business in good stead for the future, then please give us a on call 01603 319034 or email: info@jacksonscrs.co.uk for a free no obligation chat about your needs and how we can help.