by Mike Collins, Managing Director of Direct Route business to business debt recovery specialists and AccountAssyst online credit management.
It is good news indeed that electrical wholesalers are re-opening for business with construction projects spearheading this welcome initiative. Cashflow is king and now is the time to improve yours. Here is how.
- Do not base credit agreements on credit reports alone
Given credit reports are often months out of date before they are made available, make sure you upload every customer to your credit reporting provider so they can be monitored 24/7 for any changes.
We don’t know how Covid-19 has damaged or is still damaging some electricians buying from you on credit. Knowledge is crucial. Armed with the facts you can reduce credit limits and pursue overdue debts with haste if necessary.
- New customers should not be given credit automatically
Why is that new customer coming to you asking for credit? Have they burnt their bridges with other wholesalers and are now trying to buy from you because they owe money elsewhere? Be cautious. Do not grant credit until you can see from their behaviour they are to be trusted. If they fall overdue be swift in acting to collect the debt. Start as you mean to go on.
- Trade Credit Insurance – has changed and you need to know how
Insurers are reducing and pulling limits on customers. Are some of your customers in this group? Are some late payers as reported by another insured party? Bear in mind that whilst 100% of the limit for a customer may be supported by your policy the updated information being fed to insurers by the credit reporting companies, could mean that the figures have reduced significantly. If this is the case, you will need to revise credit terms accordingly.
- Review your collections process because there may be room for improvement
Make your collection cycle simple and slick. Ensure you have strictly defined stages in your credit control process e.g. on stop at 7 days overdue with the first gentle nudge reminder sent on day 10. Second reminder on day 17.
Final notice and deadline for payment on day 24; phone calls day 24 to 31. At day 31 if no payment or satisfactory response, automatically escalate to third party debt collection agency. For values exceeding £XXX or if this is a primary regarded customer refer to management for approval prior to escalation.
Any questions?
If you have any questions, please do not hesitate to contact us. We work with electrical wholesalers collecting overdue invoices and debt of all sizes. With AccountAssyst we ensure your account opening, account review and credit management processes are conducted online and are as watertight and efficient as they can be.
Let us know if you would welcome a complimentary health check of your credit management processes or would simply welcome more information on our zero cost debt recovery services.
Telephone 01274 223190
