What is a credit controller?

Proper credit control is crucial for maintaining smooth and even cash flow within a business. But what is the definition of a credit controller?  

A credit controller manages credit that is extended to customers. Central to this role is the responsibility for collecting payment on all invoices issued and monitoring payments so that customers who do not pay on time can be followed-up and outstanding payments can be collected. 

What is credit control?  

Let’s take a step back and review what exactly credit control is.  

Healthy cash flow can mean the difference between a business succeeding and a business failing. Credit control is a major part of healthy cash flow. Essentially, credit control is the act of extending credit to customers so that payment isn’t required prior to goods or services being delivered. Rather, invoices are issued after the goods are sent, and payment is then expected within the timeframe stipulated in the business’s credit or payment terms.   

The act of credit control is a key business strategy which aims to encourage higher sales through the extension of credit to customers. Credit is ideally only extended to those customers with a good credit history to minimise issues in collecting payment down the track. 

What is the role of a Credit Controller?  

A credit controller is responsible for work that has an impact not only on a business’s cash flow but on customer relationships as well. Credit control jobs all relate to how a business sets payment expectations for customers, how they ask for payment, how payment is chased when overdue and escalation when payment isn’t received.   

Key tasks include:  

• Ensuring that payment terms are up to date and fit for purpose.  
• Making sure all customers complete a credit application form.  
• Assessing if customers are worthy of having credit extended to them (and for some businesses the level of credit offered).  
• Following-up customers for payment.  
• Dealing with customer disputes that are creating a barrier to paying an invoice.  
• Liaising with internal stakeholders to resolve issues or make plans relating to unpaid customer invoices.  
• Setting up payment plans for customers who can’t pay their overdue invoices in full.   
• Payment reconciliation.  
• Escalating unpaid accounts to debt collection or legal action. 
• Regular reporting on KPIs relating to debtors. 

What qualifications do Credit Controllers usually have?  

There is a range of training that is relevant to the credit controller role, including:  

• Apprentice/on-the-job training offered by workplaces with accounts receivable or finance departments in roles such as Accounts Assistant. 
• TAFE/VET courses delivering certification on financial services, accounts administration, accounting and bookkeeping, and credit management. 
• University degrees bachelor’s degrees in accounting and business. 
• Short courses covering bookkeeping, basic accounting and dedicated training for specific accounting software such as Xero and MYOB. CreditorWatch offers a short course which trains individuals and teams in best practice usage of the CreditorWatch Collect product as well as the psychology of debtors. This provides expert guidance on following-up customers successfully for payment. 

Another thing to look out for is membership of industry bodies such as the Australian Insititute of Credit Management. Membership of bodies like this can be a good indicator that someone is involved in the credit management industry and invested in their on-going education and upskilling.  

What makes a good Credit Controller? 

Being a good credit controller isn’t all about a knack for numbers. In fact, the best credit controllers excel at building relationships and customer service in addition to staying on top of debtor days and payment plans.  

Key attributes of a good credit controller include:  

• Building strong relationships with customers – With a good customer relationship in their back pocket, the best credit controllers know who to call when an invoice goes unpaid. They know the questions to ask to dig into why payment is late and, with a strong relationship to lean on, they can push to get to the top of the ‘to be paid’ list.  
• Ability to deal with a variety of stakeholders – Following up overdue payments isn’t just about speaking to the one person who usually pays the invoices. To excel, credit controllers cast a wider net and liaise internally with the relevant sales manager or business owner and will be comfortable dealing with a legal team or debt collection agency if any overdue invoices need escalating. Good communication skills are therefore a must.
• Staying calm in the face of a storm – Dealing with overdue invoices can be stressful. Credit Controllers are master jugglers – stepping into the office they can be navigating month end reports, catching subtle clues that a customer isn’t giving the full truth about their overdue payment and liaising with a sales manager who is adamant their customer shouldn’t be put on stop credit. This is not a job for the faint-hearted or easily flustered. 
• A proactive approach – Acting before late payments become a reality or a real issue is a key trait of a successful and experienced credit controller. Setting up follow-up workflows that include ‘pre-reminders’, spotting payment trends and identifying which customers to give an extra nudge to ahead of time and when crunch time hits, picking up the phone rather than sending yet another email can all make a real difference to the bottom-line.
• A flair for numbers – While it might not be the only thing required, a good credit controller should have a strong grasp of numbers. A bit of curiosity and analytical skills for reporting purposes is a must. 

How do you know it’s time to hire a Credit Controller?  

As a business owner, when should you hire a credit controller? To make a call on this, here are a few helpful questions to give you better insight into your current credit control situation:  

• Is cashflow a problem? Does is relate to late-paying customers?  
• Who is currently completing credit control tasks and are they given ample time to dedicate to these tasks in addition to other work they complete?  
• Does the person currently doing credit control have the appropriate training?  
• Are current credit control efforts leading to issues with customer relationships?  

If you have someone in-house who can complete credit control tasks confidently and who has the time available to dedicate to this, then this is a great inhouse solution.  

On the other hand, if your credit control situation is lacklustre and current staff cannot complete the tasks required, it might be time to either outsource your credit control or hire someone to take on the job inhouse.  

If your cashflow is causing concern and you’d like to investigate outsourced credit control, you can learn more about CreditorWatch’s Accounts Receivable Specialists and the services they provide here or get in touch with one of our friendly team for a chat about how we can help you protect and grow your cashflow.