Most large businesses usually have their accountant and internal credit departments, which involve a large number of credit controllers, procurement officers, legal teams and account handlers. If you are having a credit problem with one of such companies, it would be difficult to handle it because of the sheer amount of people; you will have to deal with. It could take a long time to find and speak with an individual, who is responsible for your account, let alone handle the issue and get paid.
Every time a business fails to pay you on time, it begins to affect and strangle your cash flow. If you are a small business owner, that will make it substantially more difficult to pay off your creditors, as well as employees.
According to some recent studies conducted by the Insolvency Service, the actual number of the businesses that were liquidated has increased by more than 56 %, in the first quarter of 2016, when compared to the first quarter of 2015. All in all, there have been more than 3.000 liquidations in the first three months of 2016.
Almost any business expert will agree that the main reason behind all these liquidations is, in fact, inadequate and poor management of the cash flow. These problems are mainly caused by raised invoices and late or non-payments.
To alleviate the consequences of these issues, or completely avoid them, you should pay attention to the following credit management tips. These will help you improve your cash flow and help you avoid not getting paid.
- When finalizing a contract, make sure it is properly signed by the person, who has all the necessary authorization. Never accept a contract document signed by some receptionist or junior staff member.
- Make sure all your delivery notes are properly and clearly signed. Also, make sure they clearly state that all the goods that are supposed to be delivered are in a satisfactory condition.
- Never forget that you should get a satisfaction note by the end of every contract agreement.
- Never be soft on your credit terms. If you have decided to sign a 30-day agreement, pay attention and make sure all your customers and clients stick to it.
- Never forget to charge interest on any late invoices and payments. Keep in mind that whenever someone fails to pay you the agreed sums, they are borrowing your money.
- Last, but not least, never fear the prospect of losing one or two clients. If a client keeps failing to pay you the agreed sums, such a client is not worth having.
- If you want to settle a broken deal with your client in front of the court, to recover an unpaid debt, make sure to closely keep all your documentation. The court will expect of you to show a paper trail, so you will have to keep track of all your records and make sure they are up to date.
If you need help with the last part, you can use various software solutions for keeping your documents, dates, and records. These systems use advanced databases, which can be easily used to run credit checks on your customers and clients. With their help, you can greatly reduce the risk of any unpaid invoices and debts.