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Six things you need to consider formulating a credit control policy

by , 22 July 2013
Many businesses run into a cash flow crisis simply because they don't manage their working capital properly. Luckily, your business can avoid this. Here's are six points you need to consider if you want to implement a credit control policy to ensure your business stays cash healthy.

It's crucial that your business implements an effective credit control policy. The last thing you want in this already tough economic environment is a cash flow crisis.

But to ensure your business policy is watertight, there are six things you must ask yourself.

Implementing a credit control policy? Here are six points you need to consider

#1: How can I control credit to individual customers and for debt collection?

#2: How much extra capital do I need to finance a total credit extension? This includes big or unexpected growth.

According to the Practical Accountancy Loose Leaf, many businesses find themselves in cashflow difficulties because they grow so fast their cash can't keep up.

#3: What will additional finance cost for any increase in debtor volume or savings from a reduction in debtors?

#4: Will I achieve any savings or incur additional expenses in operating a credit policy?

#5: How can I implement a credit policy?

#6: What are the effects of easing credit?

Taking these points into account will help you formulate a sound credit control policy that'll ensure you avoid a cash flow crisis.

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