Tip of the Month
Identify Problems Before They Materialize
Managing your accounts receivable effectively
is the key to your business survival and
growth. Now more than ever, how you handle
your debts and slow collections has a major
effect on the future of your business. Here
are some tips to identify problems before
they occur and improve your chances for
getting paid.
Systemize your credit and collection policies.
First, review your account credit approval
process, your credit performance guidelines,
and how you manage delinquencies. It
is essential that you establish written
credit policies that can be delegated to
others who will enforce these guidelines for
your company.
Next, to ensure prompt payment and to make
collections easier, it is very important to
obtain accurate customer information
including their full name, street and email
address, telephone number, and if possible,
employment and banking information.
Finally, I highly recommend running a credit
report so that you can decide whether to
accept the potential customer and if so, on
what terms (COD, dollar limit, 1 delivery, or
credit card or bank account information in
advance). Knowing who you are dealing with
and their financial status will greatly
reduce your credit and collection problems.
Developing and managing a credit and
collection system will resolve any potential
collection issues down the road. Establish
guidelines, inform your customers up front
that this policy exists, and be sure that
they are enforced by your staff.
