Credit Management Health-check

Adding value to your business with a credit management consultant

I’ve been reflecting recently on how best I can demonstrate the value I can bring to a business as a credit management consultant.

You don’t know what you don’t know

The difficulty with this is two-fold. In the first instance, what a credit management consultant actually does isn’t something the small business owner tends to be aware of. And even if they are they don’t think they need it.

So, should it happen that a business experiences some sort of debt issue, whether late payments or a bad debt, they may at that point consider they need the help of a debt collector. But they rarely think about why it happened. Or, if they do, they put the blame for it squarely on the delinquent customer.

Symptoms

Late payment and bad debts are symptoms that something either went wrong, or simply didn’t happen somewhere between receiving the order and the debt going overdue. It’s most common that something didn’t happen. You forgot to do something, or you didn’t realise you needed to do something.

Liken it to a headache. If you get one you take a pain killer and carry on as before. The chances are you know the cause of the headache: you’re over tired, dehydrated or hungover. But if you were getting headaches often you’d go and see a doctor or optician to try and find out what was causing them.

Dealing with the cause: Protect and survive

So how do you work out what’s causing your customers to pay you late if you don’t know what it is that you should be doing?

In the same way that you’d go to the expert for your headaches you can call upon an expert to help you identify the causes of your late payments.

A credit management consultant will help you to identify opportunities for improvements to your processes. That in turn will improve your cash flow and save you time, money and reduce your stress. Taken to the next level they can also help you improve sales and grow your business and who doesn’t want that?

As this article by the Royal Bank of Scotland points out, ‘positive cashflow is the single most important element to keeping a business afloat.’

It’s not about admitting you have a problem

You might find the prospect of calling in a credit management consultant off-putting. It’s understandable for such an action to feel like an admission of failure. Yet the truth is that you can’t know everything. And you’re more likely to be seen as a failure if your business folds due to insufficient cash flow than if you hired an expert in their field to help you get it right.

An investment, not a cost

You spend money on advertising and marketing, considering it an investment against future sales. Which it is.

Well, by the same token, you should view hiring a credit management consultant as a similar investment, not a cost, against those same sales.

You could be doing all the marketing in the world and raking in the sales. But if your customers are poor quality, non-payers, then you’ve not only lost the cost of the sale but you’ve lost the cost of the marketing that got you that sale in the first place. Having good credit management practices will reduce the risk of non-payment, improving the return on your investment in marketing.

Don’t wait for the pain to take advantage of the gain

Don’t wait until you’ve got a huge overdue debt problem. Or you’ve suffered a significant financial loss. It’s better by far to take advantage of the value a credit management consultant can add to your business before it gets to that stage.

Just as you take your car for a service or you go for a medical check-up you can give your business a credit management health check too. After all, prevention is, as the saying goes, better than cure.

Such a check offers many benefits. It can be a catalyst for change, be an objective, fresh perspective on your business and help you to develop your staff.

Check out our other blogs for some insight into how credit management applies to your business.

If you’d like to explore how a credit management consultant would help your business get in touch to get your FREE, no obligation, one-hour consultation and we’ll get the credit management stethoscope warmed up.

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