Most Credit Solutions professionals predict a rise in corporate insolvency and failure. The banks are dealing with a significantly larger number of businesses that are under stress. A business under stress needs two things; time and money, but unfortunately banks have neither at present. However, a supplier’s credit is immediately available and a culture of late payment of invoices is an obvious consequence of these turbulent times.Here is a guide to help improve collection procedures and maintain a healthy cash-flow.
Don’t assume that customers know your credit policy Whist there are usually established trade practises in every industry, it is important to reiterate your credit policy. Never be embarrassed to ask for payment when it is due.
Keep your credit records current The affairs of companies usually don’t remain static. Changing market conditions can abruptly alter the course of a company’s health and conduct. Don’t be taken unawares by a potentially calamitous credit situation of your customer.
In periods of concern, tighten your collection procedures If business conditions are uncertain as they are today, it’s time to review and tighten up your credit control procedures. Start by revising your collection letters making them stronger and more action compelling. Phone your customers and make personal visits when appropriate. Remember; companies owe money, but people pay bills.
Try to discourage extended payment terms Screen requests for extended payment terms carefully in order to hold them to a reasonable minimum. Too many can not only endanger your cash flow but also lead to undesirable precedents in account relationships as well.
Try to resolve disputed matters quickly If the basis of a non-payment is a dispute over quality of merchandise or service, price or delivery, a mutually agreeable settlement should be arrived at promptly. The customer may use a minor dispute to withhold a substantial payment. Insist that the undisputed portion be paid immediately, indicating that the small balance will be negotiated.
What to do if all else fails Your judgement will tell you when you have exhausted all means at your disposal to negotiate a satisfactory payment while maintaining the account as a customer. At this point and prior to taking legal action, you can take positive action by referring the account to a reputable collections company. An amicable solution can still be sought by a third party and may well avoid unnecessary legal costs. Article keywords: