What is Credit Control? Definition of Credit Control, Credit Control Meaning and Concept
The credit control, or credit management, are the operations of monitoring of collections and payments pending to be applied in the scope of an organization.
The control of credits in companies is essential to carry out an effective and efficient control of the treasury forecasting tasks. Well, from the income forecast, the subsequent payment forecast can be established.
In addition, the necessary external financing needs, as well as surpluses, can be anticipated. Surpluses that can be used for temporary financial investments to obtain a return in return.
Internal and external dimension
From an internal point of view, credit control tasks are coupled with collection management. Therefore, the management and control of a company's credits are understood as the follow-up, claim and management of collections from clients and other agents pending to enter the company. All this, in order to carry out effective controls on overdue credits and pending due date and form and do not incur debt once they pass their maturity.
On the other hand, it is also important to control foreign credits. That is, the credits and loans that a company may have. From this point of view, a planning with all pending payments and maturities of the external financing of the company is managed and elaborated. As well as the possibility of non-payment once the maturity has been reached. In this case, credit control lies in managing the information and transmitting it to the rest of the departments (treasury, controlling, accounting...) to carry out the appropriate actions for all control and payments.
Credit controls are carried out from different dimensions. from annual plannings and objectives to daily and weekly. In this sense, everything depends on the risks and difficulties in obtaining payments and collections, as well as the frequency of recurrence and the weighting of the credits over the total company.