by scowan
21. July 2010 01:20
12-Step Process
I’ve collated a lot of the following information from the UK Debt Recovery Guide 2005-06’. This publication is off huge benefit to the business community.
When it comes to managing the relationship you have with your customers it highlights the need for a continuous process and a fluid mindset. Here are the first six points in this stepped process, which is advised in order to avoid the build-up of bad debts.
1.Check a new customer’s creditworthiness before drawing up a contract. We can do this for you if you are unable to yourself.
2.Refuse orders if a customer has an unacceptable payment record or obtain payments in advance. Refusing an order is often the hardest thing anyone in business can do. It goes against the grain however sometimes it is absolutely the right thing to do.
3.Set strict credit limits and stick to them. Again this is something many companies don't do. Sure they'll set them but how many stick to them and enforce them?
4.Prepare unambiguous written contracts and/or terms and conditions of trading. This is self explanatory and any legal firm can advise you on this, also often trade bodies can help too.
5.Involve the sales force in negotiating the payment terms and ensuring that these are understood and agreed from the outset. Getting 'buy=in' from the sales team makes all credit control easier, involve them in this process wherever possible.
6.Make sure you know and comply with the procedures used buy your customers’ buying and accounts departments. Not only is this good business practice it is also polite. Make it your business to find out how your customers finance department works and make sure you comply, it helps remove any potential future problems.