Credit control and cash flow is essentially the lifeblood of businesses; and ensuring that customers have timely payments is important to keep it afloat. Debt recovery can be a painstaking process which most business tend to avoid by incorporating such foolproof policies that this sort of incidents don’t happen.
Whenever a company settles with a credit control policy, there are a number of factors that need to be considered; considering the level of profitability in each sale, is an important fact and companies which may have bad debt problems may encounter a slew of problems.
Another major factor is that if a company has a “monopoly” product, or a “commodity” service, they are in better condition for debt recovery.
You need to ensure that your sales staff are familiar with the policies of the company regarding credit, using a credit application form and making check on each customers with bank references, trade references and management accounts may be important.
If there is a “doubtful” customer, try to obtain a personal guarantee. There should also be a “minimum order” level for sales with credit, which is important as there is a cost incorporated with credit accounts.