Tip of the Month
Improving Your Credit and Collection Policies
Monitoring your company's credit performance
is crucial to maintaining your business'
growth potential, especially during these
turbulent economic times. Here are some tips
in identifying possible risks and maximizing
profit.
First, develop a consistent customer
invoicing system.
Bills should be sent out on the same day of
every month. A prompt and systemized billing
procedure is essential to improving your
accounts receivable.
Next, you must set up clear and concise terms
of payment and enforce these terms. If an
invoice is
not paid as per the terms set, action must
take place
such as sending a follow up invoice within
15-30 days
after the first invoice was sent. Your
business relies on
payment for work done. Offer your customers
payment
alternatives such as: cash on delivery
(C.O.D.), debit
or credit card payment, bank checks, or by
electronic fund transfers (EFT) for credit
card payments. Consider putting credit limits
based on
payment history and do not let more than two
deliveries or shipments be made without payment.
Establishing and managing a systemized
collection process ensures that your business
will continue to grow. Focus on good service,
consistent billing practices and follow-up
calls. Take charge of the situation, don't
let your customers control your credit and
collection processes.
