Turnover is Vanity.
Profit is Sanity.
Cash is King.
I have had the pleasure of knowing Cathy Brown from Imperium for a number of years now. I am lucky enough to count myself as a friend. Cathy is the champion of the overworked business person.
In fact, as long as I’ve known Cathy she is always looking to meet a B.O.B. (Busy Overworked Business owner).
Her drive is to genuinely help businesses of all sizes with their Credit Control and Cashflow. Cathy is professional, personable, and incredibly talented at what she does.
I started the conversation with asking Cathy why she exists. Not existentially, but owning and running a Credit Control business.
Cathy responded by asking me if I knew why Credit Control exists. I didn’t, Cathy explained that Credit Control exists to make business more competitive. By extending credit to their prospective and existing clients they become more competitive than clients who can’t or don’t.
We discussed chasing payment with clients, and how hard that can be for sole traders and micro businesses. Is it right that we should feel bad about asking to be paid?
Cathy responded by telling us that the “Late payment of commercial debts act 1998”.
The Late Payment of Commercial Debts (Interest) Act 1998 adds an implied term in business-to-business contracts, giving at least 8% a year interest on the price of goods or services, plus a fixed sum and reasonable costs of recovering the debt.
When explaining Credit Control Cathy is very definite to explain the following. Credit Control is about controlling the risk to the business; it is not about chasing debt.
When extending credit to a client the biggest mistake a business can make is not having the right information.
Find out about their liquidity, their credit rating, their past, their ability to pay. Have it all agreed before you embark on business together.
When helping a client the first thing Cathy does is fix the internal process before she starts on the credit control. Cathy advises that people don’t realise just how important Credit Control is to the business.
Money. (The life blood of a business).
We went on to discuss how business owners don’t like to discuss money owed, and tried to work out why that was. We settled on that it’s an Irish/Northern Irish thing as in other countries, there is no issue asking for money owed.
Credit can become very impersonal, and the personal relationship to your clients is vital. By employing someone like Cathy, it keeps your personal relationship with your clients.
Proper training is imperative when it comes to the person that is responsible for your Credit Control.
It’s not about who shouts the loudest. It’s about the relationship, about understanding each other. It’s about getting the correct procedures in place from the beginning. Having an escalation protocol, and adhering to that.
Cathy informs me that she spends some of her time training credit controllers for other businesses. Yet another string to her bow.
Businesses should be looking at their Cashflow now before everything changes, she advises. Brexit could be really hard for businesses. There are so many unknowns. What happens when a business within the EU owe money to businesses outside of the jurisdiction?
You can’t have good credit control and bad bookkeeping
You can have good bookkeeping and bad credit control.
82% of business failure is due to Cashflow.
The difference between outsourced and employed in Finance to your business is outsourced is not there for you 24/7.
Credit Control Top Tips.
- Establish Credit Ground rules early.
- Get to know your customers.
- Know their legal status (Ltd, Sole-trader, Partnership etc.).
- Spot the warning signs early.
- Look after your invoices and statements. (Send them).
- Learn effective telephone techniques. React to response.
- Build momentum (Follow up on everything).
A fantastic talk where we all learned a thing or two about our businesses finances, and what to keep an eye on.
Thank you Cathy.