Home > Debtor Control

Debtor Control

Supplier News

Always remember that a sale is not a sale until the money is in your bank account

Here are a few tips to make sure that you get paid on time:

  • Be sure that you know who you are doing business with. Always obtain a signed Credit Application from new customers and check them out thoroughly.
  • Do not just rely on three trade references. Some organisations only pay three customers on time just so that they can use them as references.
  • Always obtain a mercantile report and check for previous legal actions and directors that have been associated with previously failed businesses. If you find either, do not extend credit. Offer a COD facility.
  • Set a credit limit. Whilst a credit limit should always be seen as a guide, if a customer is going to exceed that limit by a considerable margin (say 20%), always recheck their credit worthiness and reset the limit accordingly.
  • You should have a written policy that clearly sets out when, and under what circumstances, your organisation offers credit. This should be distributed to all interested parties (especially your sales force).
  • Do not give your customers any excuse not to pay you on time. Make sure all your paperwork is easy to read and understand.
  • Give your customers plenty of payment methods to use (i.e. cheque, EFT, bankcard, Mastercard, Visa, Diners and American Express).
  • If claims and disputes are unavoidable, make sure that you have an effective dispute resolution procedure that always results in effective corrective action.
  • Sales personnel should play an active role in ensuring that all invoices are paid on time.
  • Terms and Conditions of Sale should include retention of title clause and should be sent to the customer with a new account welcome letter. This letter is an opportunity to advise the customer of their credit limit and your payment terms.
  • Ask your customers to sign personal guarantees, if you are unable to justify the level of credit that they require.
  • Do not use personal guarantees as a reason to open an account for a customer with a poor payment history. Stick to COD.
  • Ring all new accounts before the first payment is due. Make sure that they are happy with the service / goods and confirm that payment will be made on the due date.
  • Once customers are five days overdue with their payment, ring them and ask for YOUR money. Do not be shy or embarrassed. They aren’t.
  • If you have provided a good product or service and the customer still will not pay, close the account and hand the debt over to a professional collection agency and never trade on a credit basis with these people again.

Newsletter sign-up

The latest products and news delivered to your inbox