It seems simple enough but seldom done. The ingredients of a robust set of monthly cash targets for your credit control team:
- Ensure all customers are clear on your terms of trade.
- Ensure you have a query/problem resolution system in place to resolve billing problems quickly.
- Build a cash forecast rolling out 4 months based on receipts expected from each customer.
- Ensure that all promises made by customers are placed in the cash flow forecast by date.
- Look down on the next 4 months and set a monthly cash target to be received. Revise it quarterly.
- Measure performance against target and reward achievement of target with kickers for better than target performance.
- Graph performance on the White Board for public display. 2 Graphs – one to show cash achieved against target and another graph showing Accounts Receivable against 30 days (or average terms of trade). Watch the team don’t get too keen eg AR days dropping below 30!.
