Securing working capital is a major issue these days.
Keeping cash in your business means less reliance on funding, lower costs and greater flexibility to invest in new opportunities and technologies. And at the heart of this is getting paid.
All credit controllers know there are ways to eliminate excuses for delayed payment: identify customers correctly; conduct credit checks; get everything in writing; ensure you have effective terms of business; have proof of delivery, and so on.
These are part and parcel of an effective credit management system. And research shows credit management is now more closely integrated into business processes than ever.
So it is discouraging to note that instances of late payment are growing.
Sometimes the decision to pay late is deliberate. If you know a customer will always pay late, at least you can factor this into your costs.
But what about those who promise but don't deliver? Things will sometimes go wrong. What if an account suddenly becomes delinquent?
The first step is to take action. Put those credit control procedures into action: follow up and follow up.
The ability to collect debts is governed by factors such as the age of the debt, its location, the industry, the country and the prevailing legal framework.
But do you want your credit controller spending all of his time chasing overdue accounts when he could be focusing on business development and a specialist collection agency could be doing all the legwork?
Why not outsource this work to those with an expert understanding of the techniques to employ, as well as international markets and practices?
A professional debt collection agency will have the resources to deal with UK and overseas accounts, regardless of size.
Their objective should be to secure payment on your behalf without damaging goodwill or trading relationships, and to work on a contingency basis so that if they are not successful in recovering the debt, no charge will be levied.
There are many ways a business can protect itself from bad debts. Well-thought-out policies and procedures for dealing with unpaid invoices, together with well-organised supporting paperwork, will help you to avoid having to trust in good faith when it comes to getting your money.
And collection agencies work alongside you to help prevent that overdue account becoming a hit on your balance sheet.
Tony Bushell is managing director of Euler Trade Indemnity Collections
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