It is amazing how many businesses fail to grasp the importance of getting paid to terms.
If just a fraction of the effort that was put in at the front end to get a deal was put in at the back end of an invoice, fewer businesses would go to the wall, and the phenomenon of finance charges inflating the banks' coffers while bottom lines diminished would fade into distant memory.
Excuses are plentiful but it's time businesses understood the impact of slow payment, and the resultant cost.
It's simply not good enough to wait for clients that owe you money to make payment in their own time. They may be a major corporate or a significant client that 'always pays in the end', but these clients will drain your business of cash, prevent further goods being supplied and affect your credit standing.
Dictate the terms under which you do business. Deliver the product on time, in good working order, and demand settlement on the due date.
Take an objective stance and consider how furious your client would be at late delivery; this is how angry you should be if payment is equally late.
Employ someone knowledgeable to chase and manage your accounts-receivable ledger, and don't toy with this resource. It's the biggest asset on your balance sheet.
Perhaps it's a British attitude, this reluctance to ask for settlement, like never complaining about shoddy goods and going elsewhere. Many perhaps still consider it rude to ask for payment.
Regardless of manners, paying a supplier on 30 days and giving your client 60 is not good business.
Emphasis on prompt payment is even more relevant now, with distributors having to pay vendors such as Hewlett-Packard on 15 days. It's not an early-settlement discount (ESD) that can be passed on.
Some, who do not have the cash to pay, will have to borrow (at some cost) in order to do so. This effectively kills off any ESD benefit.
A trickle of value-add resellers have asked for back-to-back 15-day ESDs, but the reply is likely to be negative in the medium term.
Poor payment history may result in shorter terms or reduced credit, and more readily applied interest charges as permitted by the Late Payments of Commercial Debt (Interest) Act of 1998 and more recent amendment of 2002.
Credit is a great, cheap interest-free loan to finance business activity. Pay on time and it will remain so; pay late and the situation may rapidly change.
Eddie Pacey is group credit services manager at Bell Microproducts Europe.
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