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Is an Ineffective Credit Policy Risking Your Cash Flow?
Are you putting your cash flow at risk by
having an ineffective or badly enforced
Credit Policy? There are many simple steps
you can take to improve your credit
policies, yet a new survey shows that 32% of
businesses are putting themselves at risk of
bad debts and uncertainty by failing to
confirm their credit terms in writing.
 The
poll, by the Better Payment Practice Group (BPPG)
found that although small businesses were
the most careful; there are still well over
a million SMEs failing to confirm terms in
writing.
René de Sousa, BPPG representative for the
Chartered Institute of Purchasing and
Supply, said:
“By not
agreeing terms up front, businesses are
putting their cash flow at risk of abuse
from late payers. The BPPG recommends that
businesses send written confirmation of
credit terms to customers before they start
trading with them, to avoid disputes further
down the line.
“As well as ensuring that customers know
when to pay, agreeing terms of trade credit
at the outset provides an important
opportunity to inform the purchaser of any
legal redress that may apply in the event of
late payment – such as the statutory right
to claim interest and compensation for debt
recovery costs under the late payment
legislation. Businesses of all sizes need to
recognise that agreeing credit terms is as
important a part of the contract negotiation
process as price, service and delivery.”
Confirming credit terms is a simple step
that has virtually no cost and takes little
time (especially if over email or the
internet); considering the potential damage
that can be caused by not doing it, it is
odd that any business would
not
confirm credit terms.
Our free BizStart24 software includes a
credit application form and a two different
terms and conditions forms; this can help
you improve your credit policy for no cost!
Remember we also have a wide range of
articles designed to help you with your
credit policy,
credit management and
debt collection.
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