5 Tips On How To Improve The Credit Control Of The Invoices

Making a placement is the highlight of a recruiter’s day – not only knowing they have placed a candidate into their dream position but also the fact that they will be billing for it.  However, making the placement is only the first step to getting the fee; the money is not yet in the bank and expecting that clients will gladly part with their funds (within the agreed payment terms) can be slightly naïve.

We live in a world where “cash is king” and even delaying supplier payments by 2-3 days can help a company’s cash position stay positive.  Every client has a different way of processing invoices for payment and this can sometimes cause delays, especially if the correct procedure is not followed. It is up to the agency to identify any special invoicing requirements early on and ensure these requirements are met.

TBOS manages the credit control for all of our agencies, chasing thousands of invoices each month and using a strict Dunning Cycle to ensure collections are made within payment terms.  Here are some tips we would give to ensure funds are collected as swiftly as possible:-

  1. Verify each invoice with the client within 7 days of sending

Every invoice that is sent by TBOS on behalf of the agencies we manage is verified (preferably by return email) within 7 days of sending in order to confirm the following:-

  1. Has the invoice been received?
  2. Is the invoice correct?
  • Will the invoice be paid on the next payment run?

This tried and tested system ensures that there can be no occasion where an invoice has not been received or that the invoice is incorrect so will not be paid.  If there is an issue with an invoice, it is addressed early and the risk of delayed or non-payment is reduced.

  1. Ask when the placement is made how invoices are to be paid

When a placement is made, it is advisable to enquire what the standard payment method is and if there is a specific process that needs to be followed in order for timely payment to be made.  Normally, the contract will provide some insight into the process such as payment terms, self-billing, PO numbers and online portals but it is best to get this clarified before the first invoice is raised and sent.  TBOS has often found that contracts will be very vague regarding the payment procedures to allow the client some ‘wiggle room’ when it comes to making payment.  Also,be wary of PO numbers as sometimes clients will withhold payment if the invoices don’t have a PO number – but these can take a long time to obtain and this will in turn cause further payment delays.

  1. Get to know the Accounts Payable Team

When a placement is made, you are often dealing with different people/departments than the ones that you arrange the placement with so it is ideal to speak to Accounts Payable directly to ensure the invoices are paid within terms.  Introducing yourself and creating a working rapport makes it easier to get invoices paid on time, especially if there are multiple invoices to be paid or if there are any issues.  Also, speak to the accounts payable team about their standard procedures – for example, the contract may state 30 days payment terms but if the company has 2 payment runs per month, you will need to ensure your invoice is picked up in the correct one to in order avoid overdue debts.

 

  1. Review your debtors on a weekly basis

Having an up to date debtors list that reflects only the current outstanding invoices is vitally important for any agency, but also taking the time to review this on a weekly basis can be the difference between having enough cash or going bust.  Reviewing the debtors can highlight clients who are not paying on time and those who could potentially be having financial difficulties.  This may also draw attention to clients that you want to increase business with but who are habitually bad payers.  You could use this information to your advantage when negotiating that next placement with them.

  1. If a finance company are chasing, review their Dunning Cycle so it meets your needs

One of the main processes that TBOS does for its clients is ensure that if an agency is using an Invoice Finance arrangement, we still manage your Credit Control procedures (either through CHOCCS or Invoice Discounting).  In our experience, the Dunning (collection) Cycle provided by the Invoice Finance company is not as pro-active as the process we follow internally.  Often, the standard process for Invoice Finance companies is to only start chasing invoices when they become 7 days overdue; they may have not even verified  that invoices have been correctly received before this point.  This can lead to an increase in the client’s debt and cause the Invoice Finance company to reduce or remove funding for this client – despite the fact that the responsibility lies with them to collect the funds.  Furthermore, the Invoice Finance company will continue to charge interest (and even refactoring charges in some circumstances) on outstanding invoices at a cost to your agency.

TBOS takes the responsibility for our agencies credit control procedures very seriously as we know that if an agency has a cash flow issues as a result of overdue invoices, this often distracts the directors from recruiting.  We have helped several agencies who have come on board with us to collect in aged debts and clean up their debtors where funds have been previously been misallocated, invoices paid incorrectly or invoices that have been raised but remain unpaid because the correct invoicing procedures were not followed in the first instance.  The TBOS credit control team also ensures that they communicate on a regular basis with the agency directors so that they are kept aware of any major issues on their debtor book.

For more information on how TBOS can help with your company credit control issues, please contact our office.