As most of you will already know, Credit Control Solutions are specialist providers of:
We had a quarterly review with one of our existing outsourced credit control customers the other day. They are in the Drinks Vending Machine business. As well as supplying vending machines, they also sell the drink ingredients for the machines.
They currently have 1800 live customers on their ledger
They mainly supply Pubs, Clubs, Restaurants & Takewaways. Their business has been severely hit by the current economic situation:
- Pubs, Clubs, Restaurants & Takeaways are considered to be a luxury purchase by the British public and they are therefore spending far less money in this sector, this in turn means that lots of businesses within this sector are going out of business resulting in more bad debts for our customer.
The finance companies that finance the leasing of the vending machines are turning down most finance deals
In addition to the above there were also other issues affecting their cashflow (cash flow)
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Staff were despatching goods even though the account was "on-stop"
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Staff were not dealing with the customer queries we were raising (they presently have 767 queries outstanding beyond 30 days with a value of £144,568)
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Staff were not taking deposits against orders for new customers
In order to combat these issues we agreed to help them implement the following changes:
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Management to enforce a properly defined on-stop policy with their staff
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Software developer to configure system to dis-allow orders to be processed where there is an overdue balance over 30 days old without managements authorisation
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A member of the management team is now responsible for ensuring that all customerr queries are dealt with within the agreed turnaround time of 7 days.
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For smaller businesses they are going to have a "1 order outstanding rule" If a customer places an order and they already have an existing unpaid invoice, this will need to be paid for by credit card prior to despatch of the new order. (only management can override this)
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Start accepting payment by Direct Debit
The effect
- It will give management more control over who they do business with. If staff try to ignore the on-stop policy they will be disciplined accordingly
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Significant reduction in bad debt
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Significant reduction in queries outstanding past the agreed turnaround date
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Significant cash flow (cashflow) improvements
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More control over when they are paid
Credit Control is more than just making telephone calls and sending out letters. it is about ensuring that proper controls are in place throughout the entire business. Only once these controls have been properly established will credit control become easier and cash flow improve.
We work with our customers to make sure that we are as effective at credit control as we can be. This often involves us being open, honest and very frank with them. Some of our customers hang off our every word and make our life easy and others require some convincing. The point is, we always get there in the end and our customers will be eternally grateful to us for this. To find out how happy our customers ar why not visit our testimonials section on our website
Jamieo "Making Your Cash Flow"
