The annual credit health check

When to have this conversation

The annual credit health check fits naturally at year-end or the start of a new financial year, alongside the work the client is already doing on their accounts. Where quarterly reviews catch issues in motion, the annual check steps back to look at the whole credit function — terms, process, exposure and collection performance — as one system.

It suits any established client with a meaningful debtors book, and it is particularly valuable for those who have made ad-hoc changes during the year and would benefit from seeing how the pieces fit together.

How to open it

Frame it as an annual service or check-up the client gets for their credit function, the way they would service a vehicle. It signals diligence and care.

• 'Once a year I like to give the whole credit side of the business a proper check-up — terms, process, exposure, the lot. Shall we book that in?'
• 'We've made a few changes through the year. This is the chance to step back and see the full picture, not just the bits we touched.'
• 'Think of it as an annual health check for how money comes into the business.'

What to say (talking points)

Walk through each part of the credit function in turn, benchmarking against last year where you can. A structured sweep surfaces what piecemeal reviews miss.

• 'Terms: are they written, current and consistently used? Have they kept pace with bigger customers?'
• 'Process: are invoices going out promptly and reminders running reliably? Where does it still depend on memory?'
• 'Exposure: any dangerous concentration, and are credit limits in place and sensible?'
• 'Performance: how does this year's collection time and bad-debt level compare with last? Better, worse, or drifting?'

Handling pushback

Clients may see it as overkill or assume nothing has changed. Connect the check to tangible value.

• To 'is this necessary?': 'It's an hour that often pays for itself many times over. Spotting a weak point now is far cheaper than meeting it as a write-off later.'
• To 'nothing's changed': 'Your business has changed even if the process hasn't, and that mismatch is exactly what these checks catch. Let's confirm it still fits where you are now.'

Turning it into action

Distil the review into a short, prioritised plan for the year — the two or three improvements with the biggest payoff, each with an owner and a date. The annual check should leave the client with direction, not a long undifferentiated list.

If the sweep uncovers aged debts still sitting on the ledger, the year is a good time to clear them: a commission-only partner can pursue them at no up-front cost. You can refer a debt for anything stuck, and draw on the library to design the priority fixes. Agree the plan and schedule next year's check.