Controlling Credit
What is Controlling Credit?
Allowing customers and clients to defer payment for goods and services is a common and often necessary practice. Credit control is the totality of the policies, procedures and practices which ensure that the total amount of credit granted and the period for which it is extended are consistent with the practices policy. This will include ensuring that: credit is granted on a systematic basis; the costs of extending credit are adequately recovered; the customer or client continues to pay within the agreed terms; and requirements for access to liquid funds are achieved. Remember the saying: "It's not sold until it's paid for!"
Controlling Credit Checklist
1. Assign responsibility for credit control 2. Introduce a credit policy 3. Re-examine terms of sale 4. Assess credit risks 5. Recheck existing customers and clients 6. Recognise the effect of bad debts 7. Review the invoicing process and the issue of monthly statements
8. List overdue and total indebtedness 9. Monitor the average length of credit 10. Introduce a collection procedure
Future Practice Owner.
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