Credit control

Why Credit Control Matters

Providing goods or services without receiving timely payment can place significant strain on your business finances. Taking legal action against non-paying customers can be time-consuming, expensive, and uncertain. Strong credit control procedures help reduce this risk and make day-to-day financial management easier.

Failing to pay suppliers because customers have not paid you can also damage supplier relationships and your business reputation. Responsible payment practices are essential for maintaining trust and long-term stability.

Getting to Know Your Customer

Before offering credit to a new customer, it is important to carry out basic checks to understand their reliability. At a minimum, you should confirm:

• The customer’s full legal name and trading address

• Their business structure (sole trader, partnership, or limited company)

• Details of proprietors for unincorporated businesses

• Trade references from other suppliers

• Their credit rating through a recognised credit agency

These checks should be completed before credit is granted, not after problems arise.

Agreeing on Payment Terms

Before supplying goods or services, ensure payment terms are clearly agreed and documented.

Key steps include:

• Discussing and agreeing on payment terms in advance

• Confirming terms in writing

• Reviewing any customer documentation that attempts to alter agreed terms

• Aligning supplier payment terms with customer receipts where possible

• Assessing whether short-term finance is required to cover timing gaps

Producing a cash flow forecast can help identify potential pressure points early and support informed decision-making.

Invoicing and Follow-Up

Once goods or services have been provided, prompt and accurate invoicing is critical.

Best practice includes:

• Issuing invoices without delay

• Ensuring all items are correctly priced and included

• Quoting reference or order numbers to avoid disputes

• Including all required invoice details

• Maintaining a structured invoice-chasing process

• Recording and analysing disputes to identify recurring issues

• Ensuring invoices comply fully with VAT requirements

Clear processes reduce delays and help resolve disputes efficiently.

Managing Supplier Relationships

Suppliers should be treated with the same respect you expect from your customers. Late payments can harm supplier trust and may affect your own credit standing.

To maintain good supplier relationships:

• Notify suppliers promptly if disputes arise

• Keep creditor records accurate and up to date

• Communicate openly if payment delays are expected

Transparency and timely communication help preserve long-term partnerships.

Credit Insurance and Financing Options

Some businesses may benefit from additional protection or funding support.

Credit insurance may be appropriate where:

• The business relies heavily on a small number of key customers

• Customer creditworthiness is difficult to assess

• The business is entering a new market

Factoring or invoice finance may be considered where:

• Cash reserves are insufficient

• Growth places pressure on working capital

• Existing short-term finance facilities are limited

• Internal credit control skills are lacking

These options can support cash flow and business expansion when managed correctly.

How Applegrow Can Help

If your business is experiencing credit control challenges, early action is essential.
Applegrow Financial Advisors can help you:

• Review customer and supplier credit procedures

• Improve invoicing and cash collection processes

• Assess financing and insurance options

• Strengthen cash flow management

Professional guidance can reduce risk, improve cash flow, and support sustainable growth.