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What Is Credit Management?
If you own a business, you know that you occasionally have customers who owe you money—and that you sometimes struggle in your attempts to collect that money. You appropriately become frustrated with not getting paid after you complete a job. Perhaps you ship an order and then have to make collection calls, or maybe you just ignore the problem and hope the bill will eventually be paid.
Smart company owners learn how to collect the money that is owed them. They also know how to prevent accounts from becoming past-due, and how to keep their customers on track with less effort. That is what is called credit management.
Credit management is the process by which you control your business’s credit, accounts payable, and receivables. Correctly managing your business’s credit entails creating an outline of policies and procedures that will provide your customers with options when they cannot pay in full and on time. Effective credit policies provide an outline or plan that will enable you to adequately provide reasonable credit limits for customers who have revolving credit. This plan would also include procedures on how to deal with past-due or late-paying accounts, as well as advice on how to eliminate them from the books. You want to have guidelines to legally collect money owed to your company that has been lost due to late payers, nonpaying customers, and bad checks. You also want to establish a streamlined system that will maintain timely contact with ...
