|
Why
credit check?
How to check credit worthiness
How much credit to allow
Collecting cash
Cheques and cheque clearing
Terms of Trade
Exporting
Quick step guide
Advice for new businesses
Creating a Speedy payment process
BACS. Top Ten Tips
Suppliers checklist
Risk reduction techniques
Insolvency diagnostic questionnaire
Tracing techniques
Understanding credit ratings
Phoenix Companies
Letters and
forms
Glossary
Support groups
Further reading
|
|
| Credit Management Advice
> Collecting cash |
|
| Do not just sell
and expect to be paid |
| Your objective is profit, not sales
volume. Do what it takes to get the customers' cash into your bank
account - fast! So, what does it take?
The sections that follow give more details on these points.
|
|
|
|
| Get close to your Customer
|
|
|
Apply the 80/20 ratio, i.e. identify the few major
customers who buy 80% of your sales - therefore who pay the most.
The Few Major Accounts
Get good credit agency reports to indicate the right level of credit.
Get to know customers' payments staff. Visit them at intervals.
Cultivate them to get priority treatment - as you would buyers.
Give them priority attention on queries and service.
The Mass of Non-major Accounts
Get the right individual's name for letters and phone calls, perhaps
from credit application forms or routine correspondence.
|
| |
|
Make
your Credit Terms very Clear |
|
In a Sales Negotiation
It is professional, not anti-selling, to say 'we can allow 30 days
to pay - does that give you any problems?'. Discuss it, don't duck
it.
On an Order Acknowledgement
Stress your payment terms, as a condition of sale supersedes any
buyer's terms. Send it to a named, responsible person.
On an Account Application Form
Include a paragraph for the buyer to sign, agreeing to comply with
your stated payment terms and conditions of sale.
On Invoices and Statements
Show the payment terms boldly on the front. On invoices, also show
the due date; e.g. 'Payment Terms: 30 days from invoice date - payment
to reach us by 14th March 200X'.
On statements, repeat the terms and indicate debts
past due dates.
Back to top
|
|
| Open
New Accounts Properly |
|
|
Attitude
Treat this as the best chance to get payments properly arranged.
The customer should expect to request time to pay and to be checked
out. Don't deliver until you are happy to allow credit. Allocating
the Account Number should be the control point.
Actions
-
Credit Application Form: - obtain correct
name, company registration number (for companies),payment address,
person for payments, phone, fax numbers,e-mail
details and acceptance of terms.
Click here for a printable application
form (Zipped Word Document).
Click here for a printable
application form (PDF Format).
-
Get credit references or not, according to
policy. Decide maximum credit amount.
-
Allocate account number and set up correct
account details.
-
Send a letter to the payment person confirming
the amount of credit available. By doing so, you are introducing
yourself to the person who will be making the payments, as well
as confirming your payment terms and reiterating the amount
of credit available. Click
here for a printable letter confirming the amount of credit
available.
- Now you are ready to sell
to the customer on a credit basis, use special ledger category
for 3 months, with telephone contact, to get customer into good
payment habits.
Back to top
|
|
|
|
