Credit Control Outsourcing

Interested in outsourcing your credit management function? If so, get in contact with us!

How many businesses can say that all of their invoices are paid on or before their due date, and say that they have no bad debts? Statistics say, very few. The likelihood is that your business, too, is losing out on the benefits of higher levels of working capital.

When any business examines their longstanding or ‘aged' debt reports, one of the first things they look at is the bad debt, and, in particular, debt over 90 days old. These are generally considered to be the areas of concern, and so they are naturally the accounts that are first chased for collection. Chasing the old accounts first (dependent upon value) is, indeed, the correct action to take, but surely it would be better to prevent accounts getting to 90 days, 60 days, or even one day overdue in the first place?

Next time you take a look at your aged debt report, don't just look at the value of accounts over 60 or 90 days old, but calculate the value of all overdue accounts. Think for a moment how much better off your business would be if that money were at your disposal. Consider what your business could achieve with it.

Unless you are a finance house, you are certainly not in the business of lending money, so why let someone else hold on to cash that is rightfully yours and benefit from it?

But, you say, how do I prevent a debt an aged debt occurring? The secret is, start chasing payment much earlier in the credit cycle and get the credit processes started even before the sale is complete!

Let's look at this more closely.

Before even completing the sale, you should conduct a credit check on your customer (dependent upon value), particularly if they are new and an unknown quantity. Granting any form of credit is going to expose your business to credit risk (such as a defaulted payment), so it's clearly in your best interests to find out who your customer is and whether they have the ability to pay the value of your invoice. If the credit check shows that their business is not credit worthy, then make them pay cash on delivery, or give them a low credit limit and short payment terms. The shorter the payment terms and the lower the credit limit, the lower the probability of default.

So, your sale is complete and you now know from the credit check that your customer definitely has the means to pay your invoice. Now all you have to do is collect the money outstanding!

As mentioned before, the best way to reduce your aged debt is by operating early in the credit cycle. Firstly, you need to confirm that your customer has received their invoice well in advance of the due date and ascertain whether the invoice is to be queried in any way at all. If a query is raised, flag it up on your sales ledger management system. If this is something that cannot be achieved on your accounting systems, this is already an indicator that your business is one which would benefit from outsourcing to a collections agency that can.

By tagging queries/activities against all invoices, you are readily able see if there are any issues that may result in late or non-payment, thus highlighting whether process improvements are required within other areas of the business. This is a useful tool for any organisation!

At this point you – or your outsourcing provider - can work to resolve any queries, or resend copy documentation (thus removing all valid excuses for non-payment). Once all queries are resolved, a commitment can be obtained from your customer as to when and how the invoice is to be paid (and they can be reminded of the payment terms). This results in timelier payments across the sales ledger.

If you outsource this process, remember the quality of service is going to affect your reputation for good or ill. It is crucial to select a provider whose staff are well trained, preferably with Institute of Credit Management qualifications and have the appropriate skills. They will then contact your customers on either a confidential basis (in your name), or a disclosed basis. The sole role of a good collections team is to contact your customers, flag up any queries, and to obtain commitments for payment. If carried out politely, firmly and efficiently, the results can be outstanding.

The efficient collection of monies owed to you means that you have to rely less on outside funding sources. This in turn may enable you to negotiate discounts with your suppliers as you are now in a position to pay them more quickly. Outsourcing has an additional benefit, too, allowing the size of your collections team to be increased or decreased according to your busiest or slowest periods. This allows you to reduce costs when you don't need staff and only pay for extra help when you have increased sales.

Many companies who have not yet reaped the benefits of outsourcing the credit management function will say they are concerned about the communication issues or the collectors' perceived lack of industry-specific knowledge. It is important to therefore outsource to a credit management provider with industry-specialised teams from which individual team members are assigned to manage your accounts on an ongoing basis. A credit management provider should be able to demonstrate to you that that industry-specific education is a key part of their staff training and development programmes.

Effective outsourced credit management is all about efficient communication between organisations. You need to ensure that the credit management agency has a dedicated account manager who stays in regular contact with you (at agreed timeframes) and conveys the information to you in ways that you will easily understand. In addition, look for a company that can provide access to a whole range of information on your sales ledger in real time through the use of a secure web browser. This ensures that you always know what is going on!

The benefits to outsourcing whole, or part of your sales ledger are considerable, whilst enabling you to concentrate on what you do best.

For free credit management advice, or to find an appropriate credit management outsourcing supplier, simply . When emailing, ensure that you send us the following information:

Your full contact details, your industry sector, annual turnover, number of customers and send us a copy of a current aged debt report (you can remove customer account names).

Any information you can send to us regarding business forecasting and current collections processes will also help us advise you on the best course of action to now take.


•  Chase the oldest accounts first – depending on value

•  Start chasing payment much earlier in the credit cycle

•  Get the credit processes started even before the sale is complete

•  Carry out a credit check on the customer, especially if new

•  Check the invoice has been received and if not, resend

•  Tag queries/activities against invoices

•  Flag up any beneficial improvements to linked business processes

•  Resolve any queries

•  Obtain commitment as to when and how the invoice is to be paid

•  Reminded them of the payment terms if necessary


•  ICM trained &/Or CSA trained staff

• Member of the Credit Services Association (CSA)

•  Industry-specific collections knowledge

•  Dedicated account managers with regular staff training

•  Regular contact at agreed time intervals

•  Real time access information access via a secure web browser

USEFUL CREDIT MANAGEMENT RESOURCES: Use the links below to access useful credit management resources:

LEARN more about Credit Outsourcing and access useful resources online here: Debt Collection Resources & Articles

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