Business Credit Management UK

Elementary Business Credit

About Business Credit

Do you either work in credit or are interested in the subject? What is credit all about? Is it necessary and does my company really need someone handling that responsibility?


What value does Credit contribute to your company?

The Credit Control Department does more than just crunch numbers and make collection calls. Today's Credit Control Department is a valuable part of the the company; helping the executive, operations and even the marketing and sales team. But in particular, the Credit Control Department should be providing value by:

  1. Making the wisest possible investment in debtors.

  2. Safeguarding the largest asset of the company - debtors.

  3. Converting debtors to cash on a timely basis.

  4. Maintaining doubtful & bad debts at acceptable levels.

  5. Helping to increase sales by reducing risk and selling safely.

  6. Allowing management to operate with confidence.

What is the purpose of the Credit Control Department?

Successful Credit Control Departments are created only after knowing the industry in which they operate in, and understanding the requirements of Management, Sales and Operations, as well as the requirements of the company's customers. Once their needs are known, a set of guidelines can be formed and the Credit Control Department can begin to operate knowing what must be done to satisfy the needs of all parties involved.

To put it simply, the purpose of the Credit Control Department is:

  1. To Carry Out the Credit/Collection Policy.


The 3 major responsibilites of the Credit Control Department

    Credit Management

    Collection Management

    Collection Management is the other side of the Credit Management coin. Whatever money has been extended on credit this has to be collected. The first decision is to determine the basic credit and collection philosophy as follows:

    Generally all credit departments must establish policies for these issues:

    1. Prompt despatch of invoices.
    2. Prompt despatch of monthly statement of accounts.
    3. Collection by telephone and letters.
    4. When contact should be made.
    5. How will customer's past due condition effect current orders.
    6. Stages of collection.
    7. When to place the account on stop.
    8. Use of collection agencies.
    9. Use of solicitors and court action,
    10. Bad debt write off.
    An organisation must be established to handle all of the collection requirements.

    1. Staffing requirements, responsibilities and duties.
    2. Chain of command and lines of authority.
    3. Sales & Operations responsibility with collection issues.

    Information Management

    Information management is the third leg of any successful Credit Control Department. Credit cannot operate in a vacuum. Not only must you keep people informed with the status of your department, but you must also receive information from the people you serve.

    1. Management
    2. Sales Personnel
    3. Operations
    4. Credit staff



Credit Control Department Goals

The Credit Control Department needs to have goals to strive for. It is up to each credit control department to determine what is important to their department and to their company, and to then work toward meeting these goals. Here are a few items that may be important to you.

Measurable Goals

Non-measurable Goals

What should I report when providing a Credit reference?

Credit personnel must be careful when providing a credit reference on a customer. This information is valuable, but the recipient must be made aware that the information provided is confidential and must not be used outside the credit control department.

When providing a credit reference on the phone it is important to ask the following questions

Once that procedure is complete, the following information can be given.
  1. The date account was opened.
  2. The credit limit.
  3. Present balance.
  4. The present ageing of the debt and how they normally pay. i e length of credit normally taken.

    No other information should be given.

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