What is credit control and what does a credit controller do?

Companies extend credit to potential clients in order to facilitate the sales of their products or services. Credit control involves monitoring client accounts and reminding them to pay outstanding invoices. It also ensures that companies only extend credit to clients who are able to pay back these debts in a timely manner

What is a credit controller and what do they do?

The credit controller is responsible for managing the debts of a business. They are accountable for recovering any unpaid money that is owed to an organisation from other businesses (commercial collection) or from individuals (consumer collection). A credit controller also evaluates new credit requests, which includes checking credit ratings, deciding whether to allow credit to a debtor and advising on credit limits.

They must also review debt recovery procedures and decide when to stop the supply of goods and services, or even commence legal proceedings, if a client has paid late or missed multiple payments. In extreme circumstances, they may need to deal with bankrupt businesses to negotiate the recovery of funds.

Key responsibilities

Responsibilities will vary, but examples include:

  • Proactively managing and collecting debts from company debtors
  • Assessing new credit requests and reviewing customers’ credit ratings with banks
  • Setting up of terms and conditions of credit
  • Ensuring timely payment of debts
  • Following up payments as needed
  • Negotiating repayment plans, and re-negotiating these if required
  • Resolving queries both internally and externally around payments and outstanding invoices
  • Processing payments and reconciliation of invoices
  • Checking and posting of receipts to accounting systems
  • Preparing statements, client status reports and other relevant information as required

Why are they important?

Successful credit control is a vital part of a well-managed business as it helps reduce bad debts and improves cash flow. It is also the key to sustaining growth. While credit controllers have one of the most challenging roles in a business, they are a key figure in supporting the financial function of any organisation.

Skills needed for this role

It is essential that a credit controller is able to build and maintain strong relationships with clients, as this is highly beneficial in the smooth running of accounts. They must also have strong attention to detail, be highly organised and have the ability to reconcile complex accounts.

Strategic Professional Options examinations linked to this role

Advanced Financial Management

Career opportunities presented by this role:

Nearly all businesses need credit control and the strong relationship management and commercial focus of the role means that there are plenty of chances for advancement to management positions.

Competencies

High level competencies required include:

  • Corporate and business reporting

    A. Prepares financial statements, corporate financial and integrated reports for external stakeholders using appropriate technology.

    B. Leads effective decision making through analysing, evaluating and communicating performance and position of entities.

    C. Prepares financial statements for groups of entities using appropriate technologies.

    D. Monitors, critically evaluates, and advises on the relevant accounting standards, regulations, conceptual and financial reporting frameworks.

  • Financial management

    A. Links developments in global trade, markets, business practices and the economic environment to required improvements in the financial and risk management of an organisation.

    B. Advises on business asset valuations, capital projects and investments using appropriate analytical qualitative and quantitative techniques.

    C. Identifies, evaluates and advises on alternative sources of business finance and different ways of raising finance.

    D. Communicates and advises on the impact on financial decision making on current developments in regulation, governance and ethics.

    E. Assesses and advises on appropriate strategies to manage business and organisational performance regarding business and finance risk and effectively communicates the impact.

  • Governance, risk and control

    A. Evaluates organisational structures and governance to protect the long-term interests of stakeholders.

    B. Recommends appropriate strategies to ensure adherence to governance structures and application of best practice internal controls.

    C. Identifies and manages risk appropriately.

    D. Uses risk management for the best interests of an organisation and its stakeholders.

    E. Monitors and applies relevant legislation, policies and procedures.

     

  • Stakeholder relationship management

    A. Positively develops relationships with internal and external stakeholders.

    B. Communicates and gains commitment from internal and external stakeholder.

    C. Uses emerging technologies to collaborate and communicate effectively with stakeholders.

    D. Applies professional and ethical judgement when engaging with stakeholders.

    E. Aligns organisational strategic objectives with stakeholder needs and manages expectations.