Credit control is the set of decisions around letting customers pay after the work rather than at the time.
Extending credit is a decision
Invoicing on terms is lending. Most small businesses do it without deciding to, because it is simply how the trade works.
The three parts of a policy
Who — which customers are offered terms at all. A credit check and trade references for commercial customers of any size; for repeat customers, their own payment history, which is the best predictor available.
How much — a credit limit, being the most the business is willing to be owed by one customer at a time. Without one, exposure grows quietly on whoever orders most.
What happens when it is exceeded or overdue — the point at which further work stops. Deciding this in advance is what makes it possible to act, because deciding it during the conversation rarely ends in stopping.
Dunning
The sequence of reminders sent as an invoice ages: before due, at due, and at set intervals after.
It works because it is systematic and unremarkable. Occasional chasing, triggered by somebody noticing, is what produces awkward conversations and worse results — see collections.
Remittance advice
The note a customer sends stating which invoices a payment covers. Without it, payments have to be matched by guesswork, and partial payments in particular get applied to the wrong invoice — which then appears overdue and gets chased.
Asking for it, and quoting invoice numbers clearly, prevents a category of dispute that is entirely administrative.
Reading the book
By age rather than by total — see accounts receivable aging. Recovery rates fall sharply with age, so the newest overdue invoices are the ones worth attention first.
The cheapest control
Not extending more credit to a customer who has not paid for the last job. It is uncomfortable and it prevents more losses than any collection effort — see reducing bad debt.