In B2B interactions it is not uncommon for large amounts of money to be exchanged. This makes it integral for your company to have a good credit control system in place.
Electronic invoicing is a key step in achieving this credit control, as it allows financial transactions to be made securely and promptly once an invoice has been sent or received.
How to set up a credit control system using electronic invoicing
A credit control system needs to consider the way in which document distribution of invoices or statements is managed using electronic invoicing. Also of importance with credit control, is to offer suitable ways for payments to be made and conduct client credit checks before entering into business with them.
A list of points to consider and questions to ask before looking at e-invoicing can be found in our guide to creating an e-invoicing business case.
Electronic Invoicing: Electronic invoicing is an excellent means of credit control because it enables a customer invoice to be emailed to them as soon as they have used a service. This email can be accessed by the client at any venue (or in any country) provided an internet connection is available. EIPP should be used to allow the client to pay their invoice as soon as they have received it; or again, from any internet site. This will help you to achieve good credit control as it paves the way for payments to be made quickly.
Document Distribution: A good document distribution system should automate the sending of dunning letters to clients whose invoice payment is overdue. This is achieved by flagging electronic invoices which have not been paid, and after a certain time alerting your company so that further action can be taken. Successful credit control experts state that a client who has reached this stage of the dunning process should be taken off your client list.
Credit Checks: Before offering credit to a client a credit check should be done of their credit history. This can be carried out by requesting a reference from their bank or another creditor.
Credit control without electronic invoicing
Credit control can still be successful where electronic invoicing is not an option. Invoices sent by post or fax should be tracked using a similar flagging system. The only difference being that a payment received without using the internet methods must be manually acknowledged to your customer database.
Although methods of invoicing by fax or post allow less effective credit control, it is important to still offer fax or postal invoicing because electronic invoicing will not be suitable for all clients. If this seems complex, outsourcing this task is a popular option for companies. Corcentric can offer assistance in this field.