This article was placed by Jordans Limited.
In a growth period some companies may suffer from “over-trading” or the problem of sustaining business growth and investment due to a lack of cash flow.
The Telegraph recently reported that in 2013 the average small firm has £31,000 worth of unpaid invoices and will wait almost eight weeks longer than contractually agreed to have their bills settled.
You can protect against this by improving the allocation of customer credit through utilising the Jordans on-line Business information database and completing the three step process as explained below.
Verify a business exists by confirming the correct company name and registered address through the Jordans Know your Client facility. This will ensure your business contract is with the correct entity and that invoices go to the correct address. Also, make sure you have agreed the terms of payment for the supply of goods to your customer as part of the contract.
Use the Jordans credit report to check their credit worthiness and establish their ability to pay for the goods and services you supply. Utilise the credit limit as a guide to the amount of credit to be allocated or credit outstanding at any one time.
Once checked each customer should be placed on the Jordans monitoring facility. This will notify you if there is a change in the “status” of your customer e.g. a change in name/address/rating, credit limit or even if the company has incurred any County Court Judgements (CCJs); CCJs can be an early indicator of potential payment problems.
Each step will give you the information you need to make informed decisions to minimise credit risk. This, alongside your collection processes, will ensure timely payment of credit invoices so that you have cash to invest into growing your business.
Ray Ruffels is Director of Business Information at Jordans Limited.
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