Get paid quicker – 5 ways to avoid bad credit risks
These credit control tips help you reduce the risk of selling to bad payers in the first place.
The collection side of credit control is difficult enough so identifying bad payer problems before you have even made a sale can save you time and money.
1. Get paid upfront.
Never any harm in stating the obvious, and it’s so easily overlooked. If you don’t want a credit control problem simply ask to be paid upfront.
Once you have the money, don’t spend it all at once because you have to pay for providing the goods or services you’ve sold.
2. Choose less risky markets
You choose which markets you work in and some of them, geographically or business sectors, are worse for payment practices than others.
Do your market research and learn from experience, but don’t stay in a sector or a country which doesn’t pay quickly unless there are other clear benefits.
3. Buy prospect lists with credit ratings
When you buy a marketing list, why not buy it from a credit ratings agency and ask for the list to include only companies that have a decent credit rating. You will get a smaller list but at least you know the prospects should be creditworthy.
4. Go with your gut
Often during the sales process it’s possible to get a gut feel as to whether you think you’ll have trouble being paid by the potential customer. There is no science to this, experience counts for everything.
Don’t ignore get feel. You’ve only yourself to blame if it turns out you were right!
5. Agree in writing your payment terms
Before you do any work or supply any goods, agree the contract in writing first and make very sure that your contract included clear payment terms. It’s too late to introduce payment terms later on and if at the outset you experience some resistance to agreeing payment terms then you know there is trouble ahead and you might choose to walk away.
This blog looks at the start of the credit management process – before a sale has even been made. Keep an eye out for the rest of the series that explores tools and techniques further along the credit management process.
If you would like to discuss your credit management requirements, call me on 020 7125 0270 or 020 8166 5960
Sales | Margins | Profit | Cashflow
PS – follow this link for more about credit control