Cash collection is often an an issue for businesses. It’s very important to find a working way to be able to implement cash collection since giving credit is at times unavoidable in many businesses. Over time, I have accumulated a number of tips you can use to avoid bad debts and improve cash collection.
There are so many simple things that make a difference if you want to improve on credit collection. Here is a list of tips:
- Think before you extend any credit.
Decide if you want to give the customer credit and how much credit you want to give.
Set limits – on both time and on amount of credit.
Then if they don’t with within the time or if they have already used up their credit allowance, don’t give anymore credit.
- If you are in a sector where Credit is the norm, offer discounts to people who pay upfront – try to make it an attractive option.
- If the amount of credit asked for is big, do a credit check.
Think, how much would it be worth now to know if this customer has a good standing record.
If the cost of a credit report is less than that, get the credit report.
- Don’t give credit to someone who is already over their limit.
- Chase the money when it becomes due.
In my experience, those who shout loudest get paid.
So be methodical and keep a log of calls, letters etc
- Through it all, be Consistent – if you make a decision, stick to it.
If you have any comments on this article or if there are any areas you would like to address, please do let me know.