Have you ever wondered what TRUST has got in common with credit control? Furthermore, why is TRUST in business so important?
“If people like you they’ll listen to you, but if they trust you, they’ll do business with you.” Zig Ziglar. As a matter of fact, the concept, idea and practice of TRUST is a broad one. TRUST plays a key role in our business, working and personal lives.
Yes, it’s true, you cannot really achieve anything, at whatever level without trust, either in yourself or in others.
However, we still haven’t talked about what TRUST has got to do with credit control. But here’s the interesting thing. TRUST has a lot in common with credit control. In this blog we will highlight two important elements behind business sustainability and success, TRUST and credit control. You get two ideas and thoughts for the price of one, namely BOGOF, buy one get one free.
Trusting people, in your business, working and social life is a challenge. And you know what, this is the business equivalent of credit control.
Should you give credit?
In an ideal world you would not provide credit facilities. There would be no worry over late payments, no business risk and the cash would keep the business wheels turning. Unfortunately, you may have little choice in the matter, and it may be considered a standard business condition. In order to help get sales, gain business and retain customers we have to offer credit facilities. Business does not operate in a vacuum and must invest in TRUST. You can ignore TRUST if you run your business single handily, with no reliance on people then you need to trust them and your judgements.
Before offering credit facilities
Check the credit worthiness of the customer and initially offer limited credit facilities and limits. When it comes to TRUST, do your due diligence and don’t blindly accept people at face value. In the initial stages of the business relationship avoid over-investing your time and energy in them. You need some validation and/or evidence of that person ability. In the words of Ronald Reagan, “Trust, but verify”.
Credit extension- to give or not to give?
If your customer conducts their account correctly, you can improve their credit terms. facilities. For example, this could be increasing their credit limit, and/or time to pay. When it comes to TRUST, adopt a similar approach. As the business/personal relationship develops, you engage more and increase your TRUST levels.
Monitor credit control
Your credit control system must be operated with clarity and certainty in terms of protocol, procedure and action. Keep an eye on how the customer is using those credit facilities, for example by using reports like an aged receivable analysis. If customers are being naughty, act assertively and with understanding. You must be careful not to be unduly aggressive and destroy a good business relationship. With TRUST, if you feel someone is not behaving as expected then deal with the situation. Don’t avoid the situation, and behave like an ostrich or a mouse
If credit control goes wrong
Unfortunately, it happens that the customer relationship breaks down. Arrears are building up; accounts aren’t being settled and formal recovery action is required. With TRUST, sometimes with all the best will in the world things don’t work out. People don’t deliver, they let you down or act unethically and without integrity. This may mean you ultimately walk away, if necessary, show some teeth. Kindness does mean softness or being a snowflake.
Using the Cloud to manage credit control
Automation and Cloud Accounting plays a major role in credit control, Xero is a popular choice. For example, sending out invoices, reminders, follow up action. Occasionally, commercial and business judgment overrides what your systems are telling you. You can rely on TRUST which requires a leap of faith as opposed to blind faith. Blind faith (or stupidity) is like a non-swimmer jumping into the deep end of a swimming pool and hoping that somehow, they would be ok
Conclusion
To sum up, credit control is of critical importance to all businesses. Business sustainability, prosperity and growth is determined by adequacy of cash flow, not just generating sales revenue and profits. TRUST plays an equally important part in business sustainability, prosperity and growth.
What next?
Above all, how good is your credit control? What do you do to establish TRUST and keep an eye on it? We’d love to see where we can help you with this. Contact us if you want to know more about understanding company cars and tax company cars, taxable benefits & business. For more business and finance , news, advice and tips, don’t forget to watch our weekly broadcasts, listen to our weekly podcast I Hate Numbers.