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.
