You have probably heard the expression, “It’s not how much you sell it’s who pays you that matters.” One of the ways you can keep more of the money from services or products you sell is by reducing your accounts receivables balances. While receivables are not in the forefront of most business owner’s minds right now, it should be. With the economy in the state it is in you need to protect yourself and your business.
Look for the following signs that you may need to upgrade your credit policies and procedures:
- A new customer does not respond to the first reselling notices. For some unknown reason, the consumer will not or cannot pay.
- Payment terms fail. In some cases irresponsible consumers pay when and if they want to. This group is responsible for 25 to 50% of the cost of collections. Cost and potential losses are reduced by quick action.
- The consumer makes repetitious, unfounded complaints.
- The consumer totally denies responsibility. Without professional help, these accounts are usually written off as total losses.
- Delinquency coexists with serious marital difficulties. These also require professional collection help, with the added urgency of obtaining payment before the disappearance of one or both of the responsible parties.
- Repeated delinquencies occur along frequent changes of address or jobs. This group is responsible for 90% of all "skips". A skip is a consumer who has moved without informing creditors or leaving a forwarding address. The chance of finding a consumer and collecting a debt will decrease over time, so quick action is important.
- Obvious financial irresponsibility is apparent. In such cases, little hope exists for voluntary payments and a quick settlement.
Take action NOW or you will be scrambling later, keep your eye on the economy and on what is happening around you so you can keep a handle on your money and the money people owe you.
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