Advertisements are the life-blood of media & publishing businesses. Sales teams try to maintain a steady stream of ads from their committed base of advertisers and work hard to get new customers on board quickly. Your team may also target a number of syndication customers. Simultaneously, you may be organising local and international events, which are sponsored by a number of different businesses.
In this fast-paced, target driven industry, it is essential for your business to maintain a consistent cash flow. And for this, it is essential to have a team and a credit control process that can strike a balance between assertively recovering the money that is owed to your business and maintaining a pleasant relationship with your customers. If this balance is not achieved, your business could end up with a large pile of bad debts and annoyed customers. Here are some of the biggest reasons for ineffective credit control in the media & publishing industry:
1. Credit provisions are not defined
Sales personnel in the competitive media & publishing sector are under pressure to sell ad space, sponsorships and syndication opportunities. Often, credit is provided where none is necessary or feasible. It is essential to consider whether the clients require credit or not – especially for new customers and where direct debit or other modes of advance payments can nip the problem in the bud. For instances where credit has to be extended, creating and following a well-defined credit management policy is a must.
2. Invoices are sent out late
It is not unusual for the accounting department to receive requests to create an invoice at the very last moment. In addition, the terms may vary from customer to customer. This can lead to delays in the generation of the invoice which can ultimately be translated into delayed payments. A process to generate invoices faster can significantly reduce the time taken by the customers to make the payments.
3. No advance reminders
Your customers may be more than happy to pay you on time, but many of them are individuals or small businesses that do not have a dedicated accounts team. As a consequence, they may miss payments simply because they do not remember to pay. By making reminder calls and emails just before the due date, you improve the chances of receiving timely payments from these customers.
4. Chasing process is not organised
Many media & publishing businesses suffer from bad debts because they are not proactive in chasing bad debts. The biggest fear is of losing customers due to a confrontation. However, with a well-defined chasing and collections process that is managed by a professional credit controller, it is possible to recover the debts without hurting the relationship.
Credit control process for any business can and must improve over time, especially for growing businesses. For businesses that are struggling to complete the basic credit control activities, reporting often takes a back seat and is then forgotten. However, by generating credit control reports like MIS, aged debtors, collection by age of debtor, debtor ledger review and suspected debtors, you gain visibility on the payments the business is receiving or missing. This knowledge can be instrumental, not only in refining your credit control process but also for taking strategic business decisions.
6. Lack of a well-defined credit control process
It would not be incorrect to say that all the above problems arise as a result of this. A well-defined credit control process ensures that each activity is carried out as per schedule. While most large businesses have a set process, the credit control activity is often dumped on the admin team when it comes to SMEs and small businesses. As many admin teams don’t work closely with the accountant or the accounting department, the task is made more difficult.
By streamlining the credit control process and placing the reins in the hands of an able credit control professional, an organisation can resolve most of the above problems. In case it is not feasible to set up a credit control department, media & publishing companies can outsource credit control to specialists and benefit from their process rigour.
Is your credit control process effective?
Do you feel that your credit control process can be more effective? Our credit control specialists would love to assist you. Feel free to get in touch with us for a free, no-obligation chat.