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Home > Cash Flow Management Checklists > Invoicing and Credit Control for Small and Medium-Sized Enterprises

Cash Flow Management Checklists

Invoicing and Credit Control for Small and Medium-Sized Enterprises

Checklist Description

This checklist outlines invoicing and credit control for small and medium-sized enterprises (SMEs).

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Invoicing and credit control should be priorities in all businesses. Poor management of cash flow is the main reason that SMEs go under. A good credit control system is an indispensable part of any business’s accounting procedures. Maintaining dependable cash flow, avoiding bad debt, and minimizing late payments are essential for survival. Therefore, while you are planning the business, prepare an invoicing and credit control system that will bring in your money on time.

  • An invoice should be easy to read, clearly showing who has sent the invoice, to whom, for what, for how much, how to respond, and when to respond by. It should always be accurate in every detail, and to the penny, when quoting amounts. Inaccuracy is an excuse to query and delay payment. Always put a retention of title on your invoice, for example, “All goods are the property of EG Inc. until paid for in full.”

  • Put in place a detailed credit control system that allows you to identify whether an invoice has been created, sent to clients, and/or paid, or needs chasing up.

  • Do credit checks on customers, especially when orders are large. Try to get them to put down a deposit as a sign of good faith. This applies particularly when you have to buy in special materials. If a customer doesn’t want to put down a deposit, it may be an indication that they should be avoided. With large orders allow for “stage payments” invoicing, as large orders that are payable only at the end of the project can be ruinous to your cash flow.

  • Decide on your general payment terms, including a payment date. Always have a “payable by” clause on your invoice and make sure that it is unambiguously linked to a date on the invoice. Bear in mind that new customers should be given only a short time in which to pay. Print terms clearly on the invoice and go through them with customers. It is best not to offer a discount for early payment; most people will just take advantage of it and still pay late.

  • Prompt invoicing is essential—aim to send out invoices the day after the goods are delivered. Start an automatic reminder system that flags overdue invoices so that you can chase them up.

Make it a priority to set up a detailed credit control system. A good system is an essential part of any SME’s accounting procedures, and getting control of your invoicing is essential if you want to succeed.

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  • A detailed credit control system allows you to identify whether an invoice has been created, sent to clients, and paid, or needs chasing up.

  • A good credit control system will help to maintain cash flow, avoid bad debt, and minimize late payments, contributing to the smooth running of your business.

  • Staged payments on large orders can help your cash flow.

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  • Not getting paid for the work that you do, or the products that you sell, is very common. You will probably always have a few debtors.

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Action Checklist

  • Find out whether your level of credit control is better than those of other businesses in the same sector.

  • Ask the client to sign a purchase order, agreeing what they want, and when and how they will pay. The purchase order should also contain terms and conditions that cover areas such as modification from the original requirement, quality standards, etc.

  • Your invoice should always be accurate in every detail and to the penny when quoting amounts. Inaccuracy gives customers an excuse to query and delay payment.

  • Invoice promptly—aim to send out your invoice the day after delivery of the goods.

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Dos and Don’ts


  • On the basis of a credit check, give a customer a credit limit if necessary and do not let them exceed it.

  • Follow up invoices before their due date.

  • Have a no-credit or cash-only list for late-paying customers.


  • Don’t think you can just “wing it”; a good credit control system is essential for survival.

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Further reading


  • Bragg, Steven M. Accounting Reference Desktop. Hoboken, NJ: Wiley, 2002.
  • Shavick, Andrea. The Cheque’s in the Post: Credit Control for the Small Business. London: Kogan Page, 1998.


  • Credit Management. “Track those invoices.” Credit Management (April 2008).
  • Hirst, Sue. “Business invoicing: Steps to avoid bad debts.” Flying Solo (October 2007). Online at:

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