Maintaining a healthy receivables pipeline is crucial for safeguarding cash flow and sleeping a little easier at night (customers of ours have actually said we help do this) . Here are five straightforward tactics to keep your credit exposure in check.
1. Run Regular Credit Checks with Software Like CreditSafe
- Set up automated alerts in CreditSafe to flag changes in a customer’s credit score or payment behaviour.
- Create checkpoints for new clients and schedule quarterly reviews for existing ones.
- Tie your internal credit limits directly to these scores, so you’re never caught off guard by a sudden downgrade.
2. Proactively Monitor and Follow Up on Outstanding Invoices
- Conduct weekly (min) reconciliations to spot overdue payments as soon as they hit your aging report.
- Automate email reminders three days before an invoice is due, on the due date, and at set intervals afterward.
- Make polite, personal follow-up calls for unresolved invoices—raising the stakes early prevents big write-offs later.
- For even better results, engage a professional bookkeeper who knows the nuances of credit control and can maintain consistent communication without straining client relationships.
- Log every interaction and update payment status in your CRM or accounting software to keep sales and finance teams aligned.
3. Implement Crystal-Clear Payment Terms and Proactive Follow-Up
- Spell out payment windows, early-payment incentives, and late-fee penalties in every contract.
- Use automated reminders three days before an invoice is due, on the due date, and one week after if it’s unpaid.
- Have a light-touch escalation process, friendly nudge, firmer request, then credit hold so customers know you mean business, but also that you value the relationship.
4. Protect Yourself with Credit Insurance
- Credit insurance transfers the risk of non-payment to an insurer, covering both domestic and export receivables.
- Shop around: policies vary in coverage limits, premiums, and claims processes.
- Factor in the cost of insurance against potential write-offs often it pays for itself if just one major debtor defaults.
5. Monitor Financial Health and Update Limits Proactively
- Track key ratios like days sales outstanding (DSO), debt-to-equity, and current ratios for your top 20 accounts.
- Set up dashboards that highlight customers approaching their credit thresholds.
- When trends tick negative, like rising DSO, reduce exposure or tighten payment terms before it becomes a crisis.
Wrapping It Up
Credit risk management isn’t a one-and-done task: it’s a continuous cycle of checking, measuring, and adjusting. By combining the automated power of tools like CreditSafe, the safety net of credit insurance, and the discipline of clear terms and diversified clients, you’ll build a resilient receivables strategy.
What’s Next?
If you’re ready to level up further, consider:
- Exploring invoice factoring or supply-chain finance to free up working capital.
- Integrating your ERP or CRM with real-time credit-risk scoring APIs.
- Hosting a quarterly credit-risk workshop with your sales and finance teams to keep everyone aligned.
Want to dive deeper into credit-management dashboards or the latest in trade-credit insurance underwriting? Let’s keep this conversation rolling, contact us to find out more