Credit control expert warns businesses to enforce tighter policies

by Emma Kreft. Published Tue 28 Apr 2009 12:46, Last updated: 2009-04-29

A leading credit control expert is warning local businesses to enforce tighter policies when collecting payments after the latest statistics revealed this week that 1.2m UK businesses are being affected by late payments.

Jenny Esau, director of Wirral based Credit Management Group UK (CMGUK), says companies around the region need to use the correct procedures after business consultancy Tenon found three in five businesses affected, with 35% of businesses claiming that late payments cost them in excess of £10,000 a year both in terms of bank charges and administrative costs.

Ms Esau, who has more than 20 years experience in the industry, said:

“We often find many companies don't have a formal collection strategy in place, therefore chasing payment is often more of a 'knee jerk' reaction to a dip in cash flow, or, invoices are left for several months before any contact is made regarding payment.

“Smaller businesses are not 'customer focused' in collecting their payments in these circumstances and may loose repeat business as well as not getting paid.”

CMGUK’s portfolio in the region includes accountants, solicitors, architects and construction companies and has grown by more than 30% over the last 12 months.

It holds regular training courses and provides a Credit Manager’s Online Toolkit for those needing guidance.

“We find with our outsourcing service that we educate our customer’s clients to pay more quickly”, she added: “We often find that our time spent on collecting payment for our clients reduces significantly over a 3-6 month period and as we do it in a customer focused way, it means they also get repeat business as well as getting paid more quickly.”

Ms Esau added that companies should know who they are trading with before they sign any contracts and also have account opening procedures, which includes a credit risk assessment and get a credit risk report.

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