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What Hinders Effective Credit Management?

credit management

There are no ifs, ands or buts about it, every business has a credit management function; how effective that credit management function is will significantly impact upon how well the business performs as a whole.

Effective credit management takes into account a whole host of different aspects within the business’ order to cash process, such as  credit checking, T&Cs, invoicing, collections and payment, anything that isn’t done correctly during any of these aspects will affect how quickly you get paid , or indeed if, you get paid at all.

What is stopping effective credit management?

Focus on sales

I have come across an inordinate number of companies that put a massive amount of effort into their sales force, which is of course important, however little to no time is spent on credit management efforts and therefore many companies find themselves in a situation in which many sales have been completed but they have not been paid.

This subsequently leads to a number of things including, hindering business growth due to working capital being tied up in debtors, high risk of bad debt and, worst case scenario, the business could become insolvent due to severe cash flow issues.

Dislike of asking for money

It is fair to say that many people do not like to ask for money, and will actively avoid the task until the last possible moment. Whilst procrastinating in order to avoid credit control may not seem like a big deal in the moment, however long term you will notice a snowball effect, your cash flow and perhaps your business will suffer as a result.

Asking for money doesn’t have to be a dreaded task, confidence is key to credit control roles and it can be easily gained through the right training, and the right knowledge of effective techniques. I have said it time and time again, credit control is a customer facing role and therefore should benefit the customer relationship not be seen as something that will detract from it.

Using the wrong methods

Einstein defines insanity as doing the same thing over and over again and expecting different results, and that is exactly what can occur with credit management. Emailing a customer over and over again, with no response, will get you nowhere and is guaranteed to make your job feel laborious with no positive outcomes.

Using a number of different methods to contact your customer, i.e. phone, email, post, will not only make your credit control tasks more varied, but you will also be able to identify which method of contact suits your customer best and gets the best results and therefore future chasing can be done in the most appropriate way.


There are many more things that will hinder your credit management function, with many easily fixed by planning ahead, having the capacity and time for credit management and understanding how to get the best results from your customers.

Our customer focused, outsourced collections service can provide you with an effective credit management function, taking away the stress of getting paid from your customers so that you can focus on your business.