We often find that businesses claim they practice good working capital management and talk about their good credit control procedures, but in fact, only really have a member of the accounts team tasked with chasing overdue debts, and the process is relatively 'de-skilled'.
Without proper monitoring it is all too easy for target driven sales departments to sell to your worst debtor, for good customers to slowly push for longer credit terms and for legal action to be delayed for fear of alienating clients. Separately or cumulatively all these factors lead to pressure on working capital; stifling to good businesses, potentially fatal to businesses under pressure.
Remember there are two sides to every story and effective credit control also involves ensuring that the credit terms offered by suppliers are maximised, excess capital is not tied up in overstocking and creditor relationships are well managed even in times of financial distress by adherence to payment due dates.
SKSi assists businesses in improving their credit control procedures by undertaking some or all of the following: -
- Operational reviews to identify and assist in implementing improvements
- Utilising KPIs such as debtor/creditor days; introduction of systematic bad debt reviews
- Setting up debt recovery procedures and litigation protocols
- Commercial due diligence
- Comparative analysis of KPIs with sector/industry
- Considering suitability of invoice discounting/factoring/stock finance