That’s the advice from Clive Lewis, head of SME issues at the Institute of Chartered Accountants in England and Wales. “Nobody can hide from the difficult credit situation any longer. Critical to coping with it is rigorous credit control – and that means having up-to-date credit references,” says Lewis. “Whilst many small businesses are diligent in carrying out credit checks on new clients, the information obtained is only of any use if it is up-to-date. In the current credit crunch climate, customers’ creditworthiness can change rapidly, so it has never been more important to ensure data on your customers is valid.”
Top tips* Get regular up-to-date credit information on major customers and periodic updates on smaller accounts.* Make sure the credit limit (which shows how much money is owed by your customer at any one time) is in line with how much you sell to the customer; and ensure you have in place robust internal procedures for dealing with customers who exceed their limit.* Assess your payment terms – make sure you have agreed when you will receive payments and remind your customers about the payment deadline * Don’t be afraid to chase your customer for payment – waiting politely will not help protect your business and your shareholders * Remember: a sale is not a sale until you have received payments!Related articlesHow to survive an economic downturnHow to kick late payers into shapePicture source
