It’s easy, especially after January, to forget that every business you act for represents at least one person on a journey. A person who once decided, for better or worse, to go it alone and break free from the rails of employment.
As unique as each person’s journey is – they all share one thing in common. Every single business owner must wear many hats to cover everything that needs to be performed on a daily basis. The hat they wear to do their main job is often the best fitting and most comfortable. It is, therefore, the most regularly worn.
The sales trilby or the social media baseball cap can be worn-in with time. But in every business, there is a dark cupboard in a backroom somewhere that is home to one very particular hat. This hat is the least comfortable of all. More uncomfortable even, than the Bookkeeper’s green eyeshades.
So uncomfortable that it feels more like an executioner’s mask. Suffocating and imposing to wear. And, like an executioner’s mask – is often considered most effective when paired with a Battle-axe.
It belongs to the Credit Controller.
Even when the sales trilby, the partnerships veil or the networking top hat are firmly back on – once worn, the credit controller mask threatens to continue casting a long shadow.
And so, what happens?
Invariably, it stays in the drawer until the stress of ever tightening cashflow outweighs the stress of chasing money. Only then is it brought out - with the same gravity and reluctance as an actual executioner – prepared to sever the relationship, if necessary.
As a result, UK businesses are left waiting for around £50bn in late payments, according to a survey carried out by digital banking firm Tide.
50. Billion. Pounds.
“Successful credit control is a vital part of a well-managed business. It helps reduce bad debts and improves cash flow, as well as being key to sustaining growth.“
So what can we do about it?
Education is a good place to start. Some invoices will have ended up on the wrong pile. Some need to be queried. Some will have been delivered to the junk folder. Sometimes people are just busy.
Ensuring your clients know the best practice around invoicing - setting clear expectations, preparing, and sending invoices properly and setting appropriate terms - can go a long way.
But to establish these best practices and really improve business cash flow, we must put on the operations hard hat and create some reliable, repeatable processes.
Perhaps the operations hard hat is one analogy too far. And one too many roles for your client to take on, too.
“The clients are really happy. There’s a feeling of relief, just by bringing credit control disciplines in, they’re able to collect money that they’d have otherwise written off. They’re relieved that someone else is picking credit control up and having those conversations with their customers.”
Steve Timmis, Director, Sempar Accountancy & Tax
Perhaps, it’s time for you, as one of their most trusted business advisors, to step in.
While most think of value-added work as involving detailed forecasts and beautiful reports – more and more firms are stepping in to helping their clients with credit control.
If you told your clients that you could increase the money in their bank account and save them hours of stress each month, how many would want to hear more?
The benefits to businesses are clear:
• Improved cash flow
• Reduced mental stress of worrying about cash
• Saved time
• Reduction in debtor days by up to 72%.
• Unlocked opportunities to grow
But best of all, they need never worry about wearing the credit controller’s mask again. Many businesses are concerned that chasing for payment from customers personally will cause relationship problems. Delegating that responsibility without compromising on business results is a huge relief.
“It goes back to cost verses benefit, if clients are paying £200 a month for credit control but they’ve got an extra £15,000 in their bank, it’s a no-brainer.”
Steve Timmis, Sempar Accountancy & Tax
With proper processes, a business can make the most of the opportunity to influence prompt payment before the invoice leaves the building.
But is it fair to ask practices to take on yet more work to support businesses after giving so much during the pandemic?
“I’ve heard accountants and bookkeepers called the doctors of the economy. You may think that’s hyperbole, but I think it’s right on the money.“
Sinead McHale CEO, Satago
It’s not just a one-way street. There are lots of benefits to your firm of offering credit control services:
• Generate thousands per month in extra fees (typical fees range from £250 - £350 per client per month)
• More opportunities to talk to your clients
• More reasons for your clients to stay with you
• Turn cost centres (your own credit controllers) into profit centres
• De-risk your own aged debtors, by ensuring your clients aren’t strapped for cash
• Offer something your competitors don’t
• Improve client data quality
Sounds like a great idea, right? Everybody wins. You get to add additional services and grow your Gross Recurring Fees, whilst simultaneously bolstering your client relationships. Your clients get to enjoy better cashflow and can get on with the parts of the business they love.
You could be forgiven for thinking it’s too good to be true. After all, there are plenty of great ideas for things that accountants could do for their clients: An entire cloud-based chorus of “game-changers” and “next-best-things”.
However, even the best ideas are worthless without execution and, when the topic of HOW to implement these “game changers” comes up – the choir often grows much quieter.
But this time it’s different.
In collaboration with Will Farnell and Rowan Van Tromp, we’ve produced an end-to-end guide for setting up a Credit Control as a Service offering.
It will take you through the cornerstones of great credit control, how to implement the systems, identify clients that would benefit the most and teach you how to communicate the value of your service to potential clients.
Each week, hundreds of businesses close. Behind every single one is a person on a journey. It’s too late for this week’s closures.
But next weeks are still here and - cap in hand - they need your help.
“It’s not often you come across a package that bolts onto your accounting software so easily. We were up and running in a matter of minutes and it has made a significant improvement in our clients’ aged receivables.”
Deborah Lynch, Managing Director, The Tax Café NI Ltd
Get started with offering credit control services by downloading Satago’s Credit Control as a Service Handbook.