Making sure your customers pay you on time

Cashflow is essential to every business, especially SMEs. That means it’s important to have a proper credit control policy in place as it reduces the risk of late or non-payers!

Let’s start with the nine basic pillars of credit control policy. The credit control process starts as soon as you receive an enquiry or an order.

Pillar One – Enquiry or order, this is the beginning of your customer’s journey and your credit process.

Pillar Two – The ‘quote’ or ‘acknowledgment of order’. This can be in the form of a tick box on a website, an automated email or a text message – each business needs to use the medium that works for it. Many will use all available options, some just the one. What is important is you prepare this internally and do not do anything with it until:

Pillar Three – Complete a new customer account form. It is hugely important to know who your customer is, where they are and how to contact them. This is just the basics however, get this bit wrong and the whole process can fail. Creating this form will prove beneficial time and time again as a business grows. KYC = Know Your Customer; who makes the payments, where should you send the invoice, are they a limited company, a sole trader or a partnership. Do you know how important a date of birth can be when tracing a bad payer? If they are VAT registered, always obtain their VAT number.

Pillar Four – Credit checking. Be very careful as you may need the consent of sole traders, partnerships and certainly consumers to carry out a credit search on them. This can be covered on the account form and only once consent is obtained can you proceed.

Limited companies and PLC’s do not have to give consent and there is a whole raft of information available for you to view free of charge. Companies House, LinkedIn, Facebook, Google and websites will all help you verify they are who they say they are. Credit Scoring agencies will offer a guide to whether they are good for any credit and what limits they recommend. Remember, don’t give more credit than your business can afford to lose.

When Pillars three and four are completed, you can set a limit and decide whether to proceed with the order or quote.

Pillar Five – Send your terms and conditions (T&C) and define how they should pay. State what you will do for the amount you are giving credit for, when it will be done or delivered and where. A good set of terms and conditions are an essential investment and are the foundation stone than can be referred back to when disputes arise. This is where you are proposing your contract.

Pillar Six– Allow a period of time to receive their purchase order or acknowledgment of quote and acceptance. Be aware of them advising their own terms or that that they won’t accept yours. If you are happy to proceed on their terms proceed if not re-send yours with a stated deadline for acceptance. If they fail to do so then your T&C’s stand.

Pillar Seven – Provide the service or deliver the product. Obtain written acceptance of receipt of goods or the services when completed.

Pillar Eight – Invoice as agreed with a reminder of payment terms and where to send payment

Pillar Nine – Payment is made in a timely fashion.

Between pillars eight and nine there is your credit control activity . Get these pillars right and with the right credit control process behind them, your cash flow will improve, disputes will decrease, late payments will be reduced and the need for debt recovery will be minimised.

(There are ten boxes in the flow chart because boxes three and four merge together in reality)


If you have an accountant, they should be your first stop for business advice. If you don’t have an accountant or they can’t help, BuBul has a wide range of experts available. For more advice on getting the right credit control policy for your business, why not contact our expert* Anita on LinkedIn?

*We’ve picked experts we know and trust who are good at what they do. All of them will give you at least an extra 30 minutes free advice if you contact them and would then charge their normal prices. They don’t pay to be on BuBul and don’t give us any money from anything they earn as an expert.