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Managing Credit for SME’s
By Declan Flood, Founder and Chief Executive of Irish Credit Management Training
Nov 11, 2014

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One thing has always struck me that while small and owner managed businesses talk a lot about credit. They complain about the lack of credit, they moan about cash flow and not getting paid on time, they give out about people and companies who won’t pay their bills, they really don’t do anything about it.

I have been invited to speak at a number of business groups over the years from Chambers of Commerce to Enterprise Boards and I am always amazed at the whole attitude to managing credit. While it may be a popular topic for discussion the reality is often very different when it comes to action.

The job of billing is often pushed down the priority list, and the longer you wait to bill your customers the longer it is going to take you to get paid. You should have a daily invoicing routine or at worst invoice everything weekly.

You should make every effort to ensure that the invoices are understandable, complete, correct and sent to the right person in the right office on a timely basis. You see, the longer you wait to send out your bill, apart from the obvious, you are sending out a message that getting paid is not really that important to you, and as a result you will be pushed down their priority list in favour of other suppliers who take a more active role in securing payment.

There should be one person in the office who is responsible for this function and following up to make sure payment is received in full and on time. I have seen various methods employed here, sometimes the boss themselves take on the responsibility for getting payment and in my experience this is the worst possible way to do things. The owner is emotionally involved and that emotion can spill over into damaging relationships with valuable customers if it isn’t managed correctly. Another option is to get the receptionist or secretary to ring for payment “when they have time”. If this is the system and the person involved has nor been trained, chances are they don’t really like this part of the job and other priorities seem to take over constantly.

The third and best option is to have a trained, educated and dedicated person, even on a part time or contract basis, depending on the workload who is responsible for hitting the monthly cash collection targets.  

Even with a dedicated person there are a number of basics that should be adhered to:

  1. Clear credit terms that specifies the day and date payment is due from each of your customers..
  2. Cash should be posted and correctly allocated on a daily basis.
  3. Credit Notes if due should be processed as quickly as possible.
  4. You have a clear method for dealing with queries, disputes and complaints.
  5. In addition to sales reports you should also monitor the gross profit by customer to ensure every part of the business is profitable.

Anyone who knows me, knows I am a fan of keeping things simple, if you want your business to survive and thrive you have to start by putting credit considerations at the front and centre of your business.

Before I finish this article there are a few more questions I think I should ask:

  1. Do you have a new account application form for every new customer?
  2. Do you perform some kind of checking to ensure they are worthy of credit?
  3. Do you have written terms and conditions (that you haven’t robbed from someone else!) that are suited to your business?
  4. Are you aware of all the different ways available to you to finance your working capital, other than relying on an overdraft?
  5. If there are old debts lying around – what are you doing about them?
  6. Do you need help in getting it all together? 

You have worked hard to build up your business, you have put in huge time and effort into getting customers to buy your goods or service and that work is detailed in your aged debtors’ analysis. The balances on your debtors ledger are just one short step away from cash, that one short step is the one that trips up most businesses. In business, you can lose money many times; you can only run out of money once.

If you need any further information on getting cash flowing through your business at an increased rate, feel free to contact me any time.

Declan Flood
Chief Executive
Irish Credit Management Training
121 Lower Baggot Street
Dublin 2

M: 087 2447052
P:  01 659 9466
F:  01 659 9401


Declan Flood FIICM, Founder and Chief Executive of Irish Credit Management Training is a, renowned trainer, international speaker and author with over 20 years hands on experience in Credit Control and Credit Management with major Irish & International Companies.

He is a graduate of the IICM Education program and a Qualified Business Coach. He received his Qualification in Training & Development from National University of Ireland. He has been training in all aspects of credit management for many years, generating a sense of enthusiasm and urgency that has been experienced by all who have been through the training experience.


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