Member Benefit Provider Ken Brown will be providing some great tips to help you avoid common pitfalls when it comes to getting paid for your services.
Ken’s tips are delivered in the format of the 7 Deadly Sins of Credit Management – Here’s the fourth tip in the series!
Deadly Sin No.4 – Complacency. They have always paid us before…
“We have dealt with them for ages and they have always paid us before”…… the words of comfort often uttered by suppliers facing for the first time an unpaid invoice from a regular customer with little sign of it being paid without recourse to legal action.
In fairness, this is perhaps the most challenging deadly sin to handle internally, often because you feel awkward. You’ve built up a certain level of trust with your more established customers – and they will often feel they have earned your trust and the right to ongoing credit with no questions asked form you. However, no matter how comfortable the relationship with a customer, It’s not a justifiable reason for ignoring warning signs that come your way.
It is sound credit management practice to monitor your customers
There are many ways to do this, some internal – including monitoring their payment habits and how often you might have to chase them for your monies, and indeed whether they kept their payment promises or not.
Others might include access to a credit reporting monitoring service which alerts you to any meaningful change in the credit status of your customer. Be cautious of sole reliance on this type of solution however as it is far from failsafe – it’s often based on outdated information, such as the latest accounts from Companies House. It is an unfortunate fact that when you receive a warning that a company has a new judgement recorded against it then it’s more often than not too late for you to have any chance of getting paid. You must be a realist when assessing how important you are on your customer’s priority list for payment.
Are you easily replaceable or are you irreplaceable?
If the latter it could well be the case that you are oblivious to a customer’s difficult financial plight until the day that dreaded insolvency notice arrives in the post and the reason for your lack of payment becomes all too clear. Don’t let it get to this stage. Be on your guard with more subtle alternatives (such as the Register of Outstanding Invoices service for example – please ask us to explain how this is so important)
When gaining a new customer try and elicit the answers to these questions.
1) Why is the company opening an account with us
2) Is it because they have finally been worn down by our dynamic sales effort?
3) Were they perhaps unhappy with the delivery service levels or pricing structures of their previous supplier
4) ARE THEY COMING TO US SIMPLY BECAUSE THEY ARE ON STOP ELSEWHERE
You may catch out those companies using you purely as an emergency credit lifeline.
Special offers for NBV Biz Ex Members
NBV Biz Ex Members can access 8 free credit reports and a standard set of terms and conditions – just register with AccountAssyst to access the reports. Log in and visit the Member Benefits Access pagefor full details of the service.
Are you having trouble finding the time for credit control or chasing outstanding payments? NBV Biz Ex Members can access Direct Route’s debt recovery services free of charge (saving £200+VAT) meaning that commercial debts of up to £3000.00 can be recovered at no cost to you.
You may also wish to access the ‘Letters Before Action’ service which provides your debtor with an opportunity to pay the amount owed to you without incurring late payment fees.
Log in and visit the Member Benefits Access page for full details of the service.
Ken Brown represents both Direct Route Collections Ltd and AccountAssyst, an online credit management service. Direct Route provides a solution for recovering debts whilst AccountAssyst provides a prevention. More details about both services can be accessed by logging into the Members’ website.