Credit Managment Policy 2011

Have you decided upon a New Years Resolution this year, or are you not bothering?

Perhaps you’ve considered taking up a new fitness regime, not drinking as much, stopped smoking or some other discipline to make your lifestyle healthier.

Alternatively you may have decided to have a change of attitude to your outlook on life, be more dynamic, work smarter or indeed spend more quality time with your family?

Its fair to say that New Years Resolutions are often fairly short lived and within no time we are living our lives as we have always lived them.

Why do we make New Years resolutions in the first place? For some it’s just tradition and for others it’s because they really want to change something about their life or business.

So I guess the question for me is, do you really want to make a difference to your business? Furthermore if you have identified an opportunity to reduce bad debt and increase sales by growing your client base then read on!

A comprehensive credit management policy can often be seen as being a business inhibitor as it may be deemed too restrictive by the customer and thus a deal breaker. This does not have to be the case if it is both well thought out and presented to demonstrate a proffessional approach committed to great customer service.

Remember, if you are offering credit, whether it be seven days, thirty days or more, you are exposing your business by the undertaking of a liability. Obviously the risk being that you may not get paid, or that payment is delayed causing cash flow issues for your business.

So take time to plan your credit management policy.

• Do I wish to assess the credit worthiness of my potential customer?
• Do I wish to offer secured or unsecured credit?
• How do I document my Orders / Deliveries / Customer Satisfaction
• How do I document my customer correspondence?
• Do I get customers to sign all relevant correspondence?
• Who is authorised to sign correspondence on behalf of the customer?
• How do I reduce the risk of potential disputes?
• How do I deal with disputes?
• Are disputes documented both when they are raised and resolved?
• How do I issue my invoices and ensure that they have been received?
• How do I monitor the ongoing credit worthiness of my client to ensure that during the longevity of our relationship their circumstances don’t change?
• What do I do when the payment terms expire and monies have not been received?
• What do I do when request for payments are rebuffed?
• How do I recover my outstanding monies both pre-legal and legal?
• At what point do I employ a legal representative to assist me?

By answering these simple questions you will start to map your current credit management policy and hopefully identify areas that will require improvement.

Over the course of the proceeding weeks I will be addressing each question specifically and offering my view point in order to assist you and your business and why, as a result, a comprehensive credit management policy can assist your sales and cash flow whilst reducing your business exposure. Further more my plan will assist when you are required to seek judgment against your customer.

Remember Credit Management is often like a hang over, the following day when you are feeling the pain, whether it be due to excess alcohol or non payment, you mutter; “Never never again!” – Until the next time!!

So let’s make our New Year Resolution that our credit management policy will be comprehensive and well planned in order to promote and preserve your business!

Have a great 2011!



ICE PACC is a comprehensive on-line credit managment system. www.icepacc.com