Opening New Accounts
By Cris Shirley, Service Manager, 6th June 2017
All of us like new business. There is nothing better than getting a new customer. However how can you make sure you enter the trading relationship with confidence? A lot of what I’m going to set out below might seem straight forward to some of you, but as with anything to do with dealing with credit customers, the work you put in at the front end pays dividends later.
Here is how you can use our system to help make life easier:
- Credit application forms: The full completion of this will ensure that the correct legal identity of the new customer application is established. This is especially relevant with restaurants, coffee shops, retailers, pubs etc.. You need to know exactly which legal entity it is that you are trading with and you need that set out in writing. The Credit application form accomplishes this. By using the form provided by CPA , the applicant also agrees to pay all costs and charges relevant to collection if they pay late.
- Status/Credit report: Based on the ownership/legal identity information contained in the completed credit application form, the relevant report should be downloaded. CPA can provide reports on all limited companies and partnerships throughout the UK and also have available on request international reports. For sole traders we have non-corporate reports and if you have used our double sided Credit Application form then you will have been given authorisation to take our a Business Owners report which will provide even more detailed information. Then use the status reports guidance in operating the credit account.
- Invoicing: It is essential that invoices show the correct legal identity of the customer. For example “John Smith t/as The Coffee Shop” for a non-limited company. Or “Joe Bloggs Limited t/as The Sweet Shop” if there is a limited company ‘behind’ the trading name. Or of course the Limited/PLC company name itself, whichever is appropriate. Failure to do this could mean that as a last resort it is not possible to pursue a debtor through the Courts.
- Credit control: This does not have to wait until the account is overdue. If time allows a quick call or email to the customer reminding them when the account is due and asking if they have any queries is always beneficial. Once the credit terms granted to each customer are exceeded then decisions regarding credit control procedures have to made. Ideally each client should be treated as an individual, but this is obviously not always possible due to volumes etc.. Unless there are exceptional circumstances the internal process should not take more than one month after the invoice/statement is overdue. The three options open to a credit controller to contact a slow payer are obviously the telephone, letters and email. It seems more emphasis should be given to obtaining the personal email addresses of the person responsible for paying when the account is first opened and then that can be used to get directly in contact with them. In an ideal situation all three methods should be used, but each scenario is different. each company will have their own procedures and will pass the account to CPA at different stages. One course of action might be to make a polite and low key initial approach, perhaps a reminder of the credit terms granted and that the account is now overdue. If the debtor doesn’t respond to that then tell them you will refer their overdue account to The Credit Protection Association for collection. If seven days later no payment or contact is received then the account should be referred to us. Rule one of credit control is you must do what you say you are going to do! Also give us their email address. When you add the customers email address to our Overdue Account Recovery Service the results obtained have, demonstrably improved.