Credit management plays a vital role in any organization that is selling goods and services in credit terms. Failure to collect overdue amounts can cause a company to close down due to inability to meet its obligation.
To avoid getting into financial crisis for failure to manage your debtors, the following tips can help you in ensuring timely collection;
- Ensure that credit customers have provided all vital details by filling a credit application form
- Clarify the terms of trade to the customer before starting to trade with them
- Remind the clients to pay before the due date by telephoning or by sending an email
- Adhere to the terms of trade
- Ensure there is a credit limit
- Ask for Bank Guarantees where possible
- Send demand letters when payment is not received on time
- Send statements and invoices on time
- Resolve any query on time to avoid disputes which may delay payments
Always remember that a sale that is not paid for is not a complete transaction but an expense to your organization. Stay on top of your debtors if you want to be a priority creditor in the books of your debtors. Remember to ask for your money always if you want your business to live long.