Do you get all the necessary information at the start of the business relationship and on an ongoing basis?
Credit is too serious a topic to leave anything to chance. Getting paid is so important we have to make every effort to make sure we get paid every single penny we are owed. Here is a point that most people miss, they usually start looking for problems in the three or four month column in their ledger and while they will definitely find lots of problems there in many cases it is too late.
In some cases it is too late as soon as the customer receives the goods, if they had no intention in paying at the start.
Most Companies are either blissfully unaware of the information that is available or they are too tight to make the investment required, or they fail to see the importance of getting and understanding the information that is available, then they wait for ages to get paid from Companies who are known late payers and worse still they end up writing off large sums of money for Companies who have closed down or gone into liquidation when the writing was on the wall a long time ago. Then they complain that the banks won’t give them any money and cash is tight and…
I know you are reading this article and you are saying – “He would say that wouldn’t he?”
Do you check to see if any of your customers are listed in the weekly Gazettes showing who have judgments registered against them?
Do you check if any of your customers are the Plaintiff for an amount that could have a negative impact on your customers business should they loose that money?
Do you have your accounts monitored on an ongoing basis to alert you of any changes that have happened in your customers business?
Do you get someone to represent you at Creditors meetings so you can see who is next most likely to go?
Do you check if the business is properly constituted in the Companies Office?
Do you get an opinion on Risk and Rating?
Do you check your customers’ payment performance with other suppliers?
Do you look at your customers’ payment performance with you?
What information do you get if your customer looks to extend their line of credit or the terms on offer?
Fact is, most of the information referred to above is available either for free or at a very reasonable cost. All you have to do is put a simple process in place to make sure you are getting the most up to date information at all times, and then have staff with the knowledge and intelligence to know exactly what to do with it. Your financial future could depend on this one vital area. If you let your sales people dictate who you do business with and to what value you are comfortable with extending – you are likely to be overexposed – by their nature sales people are optimists, and when their judgment is put beside hitting a weekly or monthly target – I think you can guess what call the sales person would make, and I’m sure you would do the same thing in the same position.