Effective Credit Control Techniques with Pre-Sales, Post-Sales, & Beyond Strategies

Getting customers to buy your product or service is great, but what happens when they don’t pay on time? It’s a frustrating reality for many businesses, and with mortgage balances having climbed by $11 billion in the last quarter of 2024, hitting a massive $12.61 trillion by December,  it’s clear that managing credit has never been more critical. That’s where effective credit control techniques come in. 

In this blog, we’ll talk about what credit control really means, why it’s so important to keep your business running smoothly, and how to improve it at every stage. We’ll walk through strategies, from setting things up before the sale to managing payments after, and even what to do once the sale is done so you can stay on top of payments and keep your cash flowing.

Whether you’re running a small business or managing a larger one, these strategies & tips will help you stay in control and protect your cash flow!

What is Credit Control?

Credit control is the process of managing how and when your business gets paid by customers. It ensures that sales made on credit, where customers receive goods or services now but pay later, are followed by timely payments.

Alright, you get what credit control is, but knowing why it matters can make all the difference in how you manage your cash flow.

Why is Credit Control Important?

Effective credit control is essential for keeping your business financially stable and running smoothly. Here’s why it matters:

1. Steady Cash Flow

When customers pay on time, your cash flow stays healthy. This ensures you can cover day-to-day expenses like salaries, rent, and inventory, without worrying about running short on funds.

2. Lower Financial Risks

Keeping an eye on customer credit helps you spot potential issues early. If a customer shows signs of struggling to pay, you can adjust their credit terms or avoid extending credit altogether to prevent losses.

3. Stronger Customer Relationships

Regular, professional communication about payments shows customers that you value their business while setting clear expectations. This transparency can build trust and encourage long-term loyalty.

4. Saves Time and Resources

An effective credit control technique helps you focus on what matters most. By prioritizing larger debts and using support, like debt collection services, when needed, you’ll spend less time chasing late payments and more time growing your business.

5. Boosts Business Reputation

Managing credit effectively shows suppliers, lenders, and partners that you’re financially responsible. This can open doors to better deals, partnerships, and opportunities for future growth.

Knowing why credit control matters is just the first step. Let’s explore the top strategies you can use to keep payments on track, starting with what to do before the sale.

Top 6 Pre-Sales Strategies for Effective Credit Control

Getting credit control right before the sale is one of the smartest ways to avoid late payments and bad debt. A little preparation upfront can save you a lot of stress down the line. Here is how you can set things up for success:

1. Set Clear Credit Terms

Your customers should know exactly what’s expected from the start.

• Spell out the payment due date, any late fees, and how payments should be made, whether it’s by bank transfer, credit card, or another method.
• Keep the terms simple and easy to understand to avoid confusion later.

Pro Tip: Include these terms directly on quotes, contracts, and invoices to ensure there’s no room for misunderstanding.

2. Check Your Customer’s Creditworthiness

Don’t extend credit blindly, make sure the customer can actually pay.

• Run a credit check to get a sense of their financial stability.
• Ask for trade references from their other suppliers to see how they handle payments.
• Review any available payment history to spot potential red flags.

Pro Tip: For smaller customers or startups without much credit history, you can ask for a partial upfront payment to reduce your risk while still securing the sale.

3. Set the Right Credit Limits

Not every customer deserves the same credit limit, it should match their financial strength.

• Base limits on their credit history, financial position, and reliability.
• For new customers or those you’re unsure about, start with a lower limit and raise it once they prove they can pay on time.

Pro Tip: Review limits regularly, a customer who was financially healthy a year ago might not be in the same position today.

4. Get It in Writing 

A signed agreement protects your business if there’s ever a dispute.

• Lay out the payment terms, credit limits, and any penalties for late payments.
• Make sure both you and the customer sign the agreement before you move forward with the sale.

Pro Tip: Consider adding a personal guarantee for high-risk customers, especially smaller businesses, to give you an extra layer of security.

5. Double-Check Customer Details

A small mistake in customer information can cause big headaches.

• Verify the business name, billing address, and contact information.
• If you’re dealing with a larger company, confirm the name of the person handling accounts payable, invoices sent to the wrong department can easily get lost.

Pro Tip: If you’re dealing with a larger company, confirm the contact person handling accounts payable so you know exactly where to send invoices and follow-ups.

6. Build a Relationship Early On

A strong relationship encourages customers to prioritize paying you on time.

• Engage with customers early and keep communication open.
• Show that you appreciate their business while setting clear payment expectations.

Pro Tip: If possible, assign a dedicated point of contact from your team to manage that relationship. This way, customers have a familiar face to reach out to, and you’re more likely to stay on top of their account.

Getting the setup right before the sale is a great start, now, let’s cover how to handle credit control after the sale to keep your accounts in check.

Top 7 Post-Sales Strategies for Improved Credit Control

Once the sale is complete, keeping control over payments is just as important as the work you did beforehand. A strong post-sale credit control process ensures you get paid on time and keeps your cash flow healthy. Here is how to stay on top of things:

1. Send Accurate Invoices Quickly

The faster you send an invoice, the faster you can expect payment.

• Make sure your invoices are clear, accurate, and error-free, and mistakes can cause delays.
• Include all necessary details: payment terms, due dates, accepted payment methods, and your bank details.

Pro Tip: Send invoices right after the sale or job is completed. Waiting too long can make customers think payment isn’t urgent.

2. Set Up a Payment Reminder System

Don’t wait for payments to be overdue before reaching out.

• Send friendly reminders at key points: a few days before the due date, on the due date, and shortly after if the payment still hasn’t arrived.

Pro Tip: Use accounting or invoicing software to automate reminders, this keeps things consistent and saves you time.

3. Monitor Outstanding Payments Regularly

Keeping track of who has paid (and who hasn’t), helps you act fast on late payments.

• Spot late payments early so you can address them before they snowball into a bigger problem.
• Reviewing your accounts receivable regularly and weekly is a good rule of thumb for most businesses. You can use a reliable partner like South East Client Services Inc. (SECS) to manage accounts receivable, from overdue invoices to pre-legal collections.

 The image above features the homepage of SECS, a third-party agency that supports businesses with accounts receivable management.

Pro Tip: Color-code or flag overdue invoices in your system to make it easy to see where action is needed.

4. Follow Up on Late Payments Quickly

If a customer misses a due date, don’t ignore it, reach out right away.

• Keep the conversation polite but firm. A friendly nudge is often enough to get things moving.
• If the delay continues, ask if there’s a specific reason and offer solutions, like a short-term payment plan, to help them get back on track.

Pro Tip: Avoid being too aggressive early on. A calm, professional approach maintains the relationship while showing you take payments seriously.

5. Charge Late Fees if Needed

Late fees can motivate customers to prioritize your payment, but they only work if you enforce them.

• If you outlined late fees in your initial agreement, follow through when customers miss the deadline.
• Be clear about how the late fee works (e.g., a flat fee or a percentage of the invoice total).

Pro Tip: Remind customers of the late fee policy before applying it, this gives them one last chance to pay without extra charges.

6. Keep Communication Open

Sometimes, customers face genuine financial trouble. If they’re upfront about it, try to work together on a solution.

• Showing flexibility can protect the relationship while still helping you recover the money.

Pro Tip: Document any new agreements to avoid misunderstandings later.

7. Know When to Escalate

If reminders and follow-ups aren’t working, it might be time to take things to the next level.

• Start with a formal demand letter, a written statement that outlines what’s owed and sets a final deadline.
• If that fails, consider hiring a collections agency. This should be a last resort, as it can strain customer relationships, but sometimes, it’s necessary to protect your business.

Pro Tip: Weigh the costs of collections against the amount owed. For smaller debts, it may not be worth escalating.

Credit control doesn’t end once the deal is done. Here’s how to stay in control even after the sale.

6 Strategies for Credit Control After Pre-Sales & Post-Sales

Credit control isn’t just about setting payment terms or following up on late invoices. To keep your business financially stable in the long run, you need strategies that go further. The following pointers will help you strengthen your credit control process for the future.

1. Regularly Review Customer Credit Limits

A customer who was reliable last year might not be in the same position today.

• Set a schedule, quarterly or annually, to review customer credit limits, especially for your larger accounts.
• Look at their current payment behavior, financial performance, and any new credit reports to decide if their limit needs adjusting.

Pro Tip: If a once-reliable customer starts paying late or requests bigger orders, it might be a sign to lower their credit limit or switch them to upfront payments.

2. Monitor Industry and Economic Changes

Sometimes, the problem isn’t your customer, it’s the market around them.

• Keep an eye on industry trends and broader economic factors that could affect your customers’ ability to pay, like rising defaults, supply chain disruptions, or inflation spikes.
• If you notice warning signs, proactively review your credit control strategies. For example, you might tighten terms for high-risk sectors or check in with key clients to gauge their financial stability.

Pro Tip: Use business news sources and industry reports to stay informed, being proactive is always better than reacting after payments stop.

3. Offer Flexible Payment Options

Making it easier for customers to pay can help prevent overdue invoices.

• Provide multiple payment methods, online payments, credit cards, direct debits, or staggered payment plans, to accommodate different preferences.
• Balance flexibility with your cash flow needs. For example, a split-payment plan could reduce the risk of non-payment while helping customers manage their cash.

If you’re looking for customizable, flexible payment plans, SECS has you covered. They offer convenient plans where you can choose the amount, frequency, and timing of payments, making it easier to stay on top of your finances without straining your budget.

4. Train Your Team

Credit control isn’t just a job for your finance team, it’s a company-wide effort.

• Ensure your sales, finance, and customer service teams understand your credit control process.
• Train them to spot early signs of trouble, like customers asking for unusual terms or delays in communication, so issues can be addressed before they escalate.

Pro Tip: Regular refresher training helps keep everyone aligned, especially if your process evolves over time.

5. Keep Detailed Records

Good record-keeping can save you time and money if a payment dispute arises.

• Keep accurate, up-to-date records of all sales, invoices, payments, and communication with customers.
• If a customer claims they never received an invoice or misunderstood the terms, having a clear record lets you resolve the issue faster, and with fewer headaches.

Pro Tip: Digital accounting systems make it easier to organize and access records quickly. Consider using one if you aren’t already.

6. Evaluate Your Process Regularly

Even the best credit control systems can get outdated.

• Set a routine (every six months or annually) to review your process and see what’s working and what isn’t.
• Are late payments increasing? Are reminders getting better results via email or text? Adjust your strategy based on what the data shows.

Pro Tip: Gather feedback from your team, they’re on the front lines and might spot problems or inefficiencies you missed.

Conclusion

By now, you’ve seen how a strong credit control process is key to keeping your cash flow steady and reducing the risk of unpaid invoices. From setting clear payment terms and running credit checks to automating invoicing and following up on late payments, each strategy plays a vital role in ensuring your business gets paid on time.

Implementing these effective credit control techniques doesn’t just protect your revenue, it also saves time, strengthens customer relationships, and helps you focus on growing your business.

For businesses looking to take credit control to the next level, SECS offers tailored solutions to manage debt more efficiently. Whether you prefer a one-time payment to clear balances immediately or need a flexible, customized repayment plan, they provide options designed to fit your needs. 

Their approach combines proven collection methods, advanced data analysis, and a commitment to ethical practices, ensuring both effective results and a positive customer experience. 

Ready to improve your credit control process and protect your business’s cash flow? Contact SECS today for tailored solutions that can help you stay on top of payments and reduce financial risk!