I have been working with a number of clients lately where cash management is an issue. I am sure that’s true for every accountant now.
There are so many simple things that make a difference here.
- Think before you extend 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 up front – 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 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, they 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.