Unleash Your Cash Flow: A Simple Guide to Creating a Credit Control Process

If you’re a small business owner, chances are your focus is on what you do best—whether
that’s plumbing, design, or making the best darn coffee in town. But when it comes to getting
paid for all your hard work, things can get a little messy, especially if your credit control
process is, well, non-existent.

Credit control might not be the most glamorous part of running a business, but it’s essential
for keeping your cash flow healthy. And let’s face it, we all know that “cash is king.” But how
do you set up a credit control process when you’re already stretched thin? Don’t
worry—we’re here to break it down into manageable steps, with a few tips and tricks to make
it easier.

Step 1: Take Stock of Where You Are

Before diving into a shiny new credit control process, take a moment to look at what’s
happening in your business right now. If your accounts receivable (AR) looks more like a
wish list than a collection of actual payments, it’s time for an audit. Review your current
invoicing practices, payment timelines, and the age of outstanding invoices.
This will give you a clear picture of where the problems are and what needs the most
attention. And hey, don’t be too hard on yourself if things are a bit chaotic—that’s why you’re
here, after all!

Step 2: Set Clear Credit Terms

Imagine going to a shop and finding out at the till that you’ve got to pay for your coffee in 45
days—sounds absurd, right? Yet, many small businesses don’t make their payment terms
clear, leading to confusion and delayed payments.
Define your credit terms upfront, and make sure they’re easy to understand. Whether it’s
“net 30” or “payment on delivery,” put it in writing and make sure your customers see it
before they sign anything. Remember, you’re not just a friendly neighbourhood business;
you’re also running a tight ship.

Step 3: Know Who You’re Dealing With

Not all customers are created equal—some are fantastic, and some… well, they might need
a little more encouragement to pay up. Implement a credit assessment process for new
customers to gauge their reliability. Tools like credit reports or even just a quick reference
check can save you a lot of headaches down the line.

Set credit limits that match the customer’s ability to pay. This way, you’re not extending a line
of credit to someone who’s more likely to default than pay you on time.

Step 4: Keep a Close Eye on Your Accounts Receivable

Once you’ve extended credit, keeping tabs on those invoices is crucial. Don’t wait until an
invoice is 30 days overdue before you start to worry. Set up a system that allows you to
monitor accounts receivable (AR) regularly.

Many accounting software platforms can send automatic reminders before payments are
due. And don’t underestimate the power of a friendly nudge—a quick follow-up can often be
enough to get things moving. But if you find that some customers are consistently late, it
might be time to reconsider their credit terms.

Step 5: Streamline Your Collection Process

Let’s face it: chasing payments is no one’s idea of fun. However, having a structured
collection process in place makes it a lot easier to manage. Start with a polite reminder as
soon as the payment is overdue, and if necessary, escalate to a more formal follow-up.
If gentle reminders don’t work, you might need to consider more assertive measures like late
fees or even legal action (as a last resort). The key is consistency—having a set process will
help you stay on top of overdue invoices and reduce the emotional stress of collections.

Step 6: Unlock Your Cash Flow with FundTap

Even with the best credit control process, sometimes your cash will be tied up in AR
invoices, and you need that money now. That’s where a service like FundTap can be a
game-changer. FundTap allows you to unlock the cash tied up in your invoices so you can
keep your business running smoothly while waiting for payments to come in.

By advancing you a percentage of your invoice amount, FundTap helps bridge the gap
between issuing an invoice and actually getting paid. It’s like getting a boost when you need
it most—without waiting for your customers to pay on their own (made-up) terms.

Step 7: Regularly Review and Refine

The business world is always changing, and your credit control process should be, too.
Schedule regular reviews to see what’s working and what could be improved. Are your
customers paying on time? Is your AR aging well, or are invoices lingering longer than they
should?

Take this opportunity to adjust your processes and keep everything running like a well-oiled
machine. And remember, even minor improvements can make a big difference in your cash
flow.

Final Thoughts: Small Steps, Big Impact

Creating a credit control process doesn’t have to be overwhelming. By taking it one step at a
time, you’ll build a system that helps keep your cash flow healthy and your stress levels low.
So, here’s a little challenge for you: Take a look at one part of your credit control process that
you can improve in the next week.

Maybe it’s setting more explicit credit terms or just making those follow-up calls on overdue
invoices. Whatever it is, start small and watch the impact grow.

And if you find yourself needing a bit of extra help, whether it’s cash flow support with
FundTap or just some friendly advice, remember—you’re not alone in this. We’re here to
help you keep your business thriving, one step at a time.

P.S. If the thought of managing the day-to-day of your credit control process makes you want
to run for the hills, why not let Admin Army handle it for you? We’re experts at keeping things
running smoothly so you can focus on what you do best—growing your business.