Free how to guide to credit management

A new guide has been launched that could help small businesses deal with the problem of the late payment of invoices.

A new guide has been launched that could help small businesses deal with the problem of the late payment of invoices. The guide – called ‘Better Payment Practice: Your guide to paying and being paid on time – has been produced by the Better Payment Practice Group (BPPG) as part of its year-long “Collect the Cash” campaign to educate and encourage small businesses on trade credit management and control.

The guide points out the importance of implementing a credit management system from the start of a supplier-buyer relationship, and gives a checklist of how to vet potential customers. It provides advice on how to manage the inevitable credit risk that all businesses have to take (to a greater or lesser extent) and illustrates the techniques a supplier could employ to reduce the chances of risk.

Advice on how to collect that hard-earned cash – as well as a series of “sound economic reasons” why the practice of deliberately paying later than the agreed terms is wrong – are included. Information on The Late Payment of Commercial Debts (Interest) Act 1998 is provided, and a list of useful sources of help and information appended.

David Mullen, Director of credit management specialist Credico, a sponsor to the guide, pointed out that half of the insolvencies that occur are due to financial and management skill flaws, which negatively impact on credit control. According to Mullen “when you also consider that the highest incidences of insolvency are in companies with a turnover of less than £5 million, it is obvious that this Guide will be extremely valuable for all businesses, particularly SMEs.”

The guide can be viewed at the BPPG website at www.payontime.co.uk

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