Have you got a Credit Management Process?

Every business needs a robust Credit Management Process so that they get paid on time, every time. It doesn’t have to be complicated, but it does have to be followed every time. That way you get the best results.

Here is an example of a basic Credit Management Process that can be followed by any type of business that doesn’t get paid in advance but offers credit to their customers.

Step 1: Put payment terms on all invoices

Clearly mark the due date, which is normally 15 or 30 days from the date of invoicing, and make sure it is clear how the customers can pay. Give them more than one option, such as bank transfers and credit card payments.

Step 2: Send invoice

Invoices are sent on the first working day of the month by e-mail, with the following wording: 

Dear customer,

We would like to thank you for your custom. Please find attached our invoice for £xx.

We would appreciate it if you could pass it for payment.

Kind regards,
Accounts person
Your company

Step 3: First reminder on the due date

On the due date, check if the payment hasn’t been received yet and if not, send out a reminder email:

Dear customer,

We would like to remind you that our invoice xx is due for payment today.

We have attached a copy of the invoice and a Statement of your Account for your convenience.

We would appreciate prompt payment.

Kind regards,
Accounts person
Your company

Step 4: Second reminder on +15 days

If payment hasn’t been received 15 days after the due date, make a phone call to the customer’s contact or their Accounts Department to ask when they plan to pay. Follow this up with an e-mail:

Dear customer,

Further to our conversation with regards to payment of our invoice xx for £xx, we understand that we should receive payment by xx.

Thank you for your assistance in this matter.

Yours sincerely,
Accounts person
Your company

Step 5: Third reminder on +30 days

If payment still hasn’t been received 30 days after the due date, make a second call to the contact or their Accounts Department. Quote the details of the first call and the e-mail and request immediate payment. Confirm by e-mail:

Dear customer,

Further to our conversation with regards to payment of our invoice xx for £xx, we understand that we should have received payment of this by xx.

As this is now overdue, please confirm when this payment will be received.

Thank you for your prompt assistance in this matter.

Yours sincerely,
Accounts person
Your company

Step 6: Final reminder after +37 days

If payment has not been received within 7 days of that conversation and e-mail, you need to send a red e-mail, followed by a letter on red paper:

Dear customer,

We regret to inform you that we have not received payment for our invoice xx, despite assurances that this payment would be made.

If cleared funds are not received in 7 days, we will have no alternative but to pass your account on to our Credit Management Agency and charge Statutory Interest and Late Payment Charges.

Your immediate payment will be greatly appreciated and will avoid us having to take further action.

Yours sincerely,
Accounts person
Your company

Step 7: Pass to a Debt Collection Agency or take legal action

The account is passed to a Debt Collection Agency or Legal Action is taken. We suggest a Statutory Demand for Business Debts over £750 or Consumer Debt over £5,000.

How can we help?

Please remember that we are experts in this field and that we are here to help. If you want any assistance with any of these steps, feel free to contact us for a free, no obligation assessment of your Credit Management Process.

Call us on 0845-6385256 or email info@credebt.co.uk

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