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How to manage credit effectively

Credit, the necessary evil.

In an ideal business world the term ‘credit’ would perhaps not exist and every transaction would be paid in full at the time of purchase, like a point of sale transaction. The reality of course is that it is good business practice to offer customers some sort of credit terms, often 30-days, in the ‘hope’ that the debt is paid in full within the timeframe allowed. After all, allowing credit or time to settle up enables that business one further step along the supply chain, to sell to their customer.  This keeps the delicate cycle of buying and selling in continuous flow.

However, if credit extends beyond the agreed terms then the age old act of the time consuming phone call ‘chasing payment’ kicks in. This is often followed by more and more calls to create yet another continuous cycle, this one increasingly of less value.

Two sides to a trade

When we buy something from someone, that someone being a person or business, we’re satisfying a known and recognised need. Of course we weigh up the options in the market before deciding, but fundamentally by agreeing to buy from someone, we place our trust in that person or business to deliver their side of the bargain. At the same time, the person on the other side of the deal is also relying on their customer to pay for the product or service delivered in a timely manner and within the agreed credit terms.

What has happened that so many businesses face the challenge of having to chase their customers for payment? At an industry level we see ISME report that “21% of SMEs are experiencing delays of 3 months or more” while Minister Nash calls for Irish businesses to sign up to the Prompt Payment Code with the aim of helping businesses get paid on time.

To look at this objectively one might think that while the business side honours their side of the bargain, the payer appears to renege on their end of the deal, after all there are two sides to every trade.

Credit management solution   

Credit works but make sure there’s an easy way to pay

Elements of an effective credit control function range from accurate and timely delivery of invoices and clearly stated credit terms through to providing efficient payment options and promotion of early payment. At DebaPay we focus on making it very easy for people to pay their bills.

The DebaPay system connects buyer and seller to simplify the task of making a payment. While it may be perceived that people in general deliberately delay payment for whatever reason, by working closely with our customers we have found that providing a simple method of payment results in the payer  responding in kind by simply paying the bill when asked to do so once everything is in order.

Keep on chasing payments? Maybe, maybe not.

DebaPay enables businesses to send out payment requests electronically to their customers and provides the end customer, the payer, with a secure and flexible method of approving payment of a bill based on mutually beneficial terms. Businesses benefit by getting paid within the agreed credit terms while their customers benefit by having a simple way to pay, a full audit record of their payments made and peace of mind that all bills are settled. Here both sides of the trade win.

Please feel free to contact us at DebaPay to learn how we’re helping our customers get paid on time.


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