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Obtaining new customers is great for business, unless they fail to pay you. If you fail to check that the customer can support the amount of credit you are granting, then commencing legal action when they do not pay can be a long drawn out and potentially costly process.
If payment from the customer is not obtained and the goods or services have been provided, your cash flow is likely to be under pressure. Ensuring that customers pay on time will make managing your business easier.
If you fail to pay your suppliers because you have not been paid by your customer then you could also be damaging their business as well. This is not only bad business practice but could be regarded as corporate social irresponsibility. Treat your suppliers as you want your customers to treat you.
Factors to consider
The first thing you should do is get to know your customer. This should start before you take on a new customer and before you give them any credit. The bare minimum of what you should know is:
Before you provide goods or services to any customer make sure you address the following:
After you have provided goods or services to a customer ensure that you:
Consider your suppliers- treat them as you would like to be treated
Remember that not paying your suppliers on time is a bad business habit and it may result in a drop in your credit rating. You should:
Some businesses unfortunately go ‘bad&rsquo so you may wish to consider obtaining credit insurance where the business:
Businesses should consider obtaining factoring and financing options when:
How we can help
If you are struggling with your cash flow in these difficult times then we would be happy to discuss this further with you. Please contact us for more detailed advice.
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