Home > Uncategorized > How not to run a credit control team

How not to run a credit control team

I recently consulted with a rapidly growing business that was experiencing difficulties with their debtors. Clearly for reasons of confidentiality I cannot disclose who the client was but below is my summary of their issues.

The key here is that whilst this was a pretty extreme case, the problems are familiar and largely revolve around staff management and motivation. Another difficulty is that certain finance people cannot understand that credit control is not exclusively a “process” role.

1. The team lacked focus. I set targets and this brought about some motivation but credit controllers need to take ownership of their ledger.

2. The targets should be two fold. Day to day collection total targeted on a monthly basis and a target for reducing the old debt. Under no circumstances whatsoever should targets be based around “calls made” . Making a call is very different to getting a result and if one call takes all morning to release a large old debt then so be it

3. Credit controllers need some lassitude to take responsibility. Unlike many in accounts the best credit controllers are self motivated and should not require anything more than guidance. With targets to hand they know what is required

4. The process for chasing is muddled. Accounts under £1k should be purely chased by letter unless there is a dispute

5. Supposedly difficult accounts should not be handled by anyone other than the credit controllers unless there is a negotiation in place. I could not understand why others such as the financial controller were getting involved. It’s extremely demotivating for a credit controller with the clear message that they cannot be trusted

6. Some of the management team consistently referred to disputed accounts as “your problem” . I have not encountered this attitude before and it’s completely dysfunctional. This has to change. There are better methods to handle the disputes than weekly meetings and I had something effective in mind

7. You need skilled credit controllers with a strong attitude. Not temporary staff who are simply “chasing debt”. They should be looking at the role as a career and be looking at debtors as an asset of the business that carries some risk and needs careful management. They need encouragement and training.

8. The letters badly needed rewriting. Frankly they were not even literate. I was in the process of doing so. There needs to be a set routine for management of the letters

9. Seriously overdue debtors should receive a solicitors letter. Online claim forms are fine but can cost and can drag out the collections. They should be a last resort given that they take up time and resources. I negotiated a good package with a top firm of lawyers. It would be cheap and effective

10. There needs to be consistent reporting of debtors days and aged totals.

11. Credit assessment is essential. Bad debts are expensive and most are avoided by skilled credit rating

12. There is a tendency to apportion blame rather than genuine teamwork. I have always found that any credit controller under my charge who was willing to work would be guided towards motivation and strong results. That is not a boast but the key is that their failings were my failings. I took always took that responsibility

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