It’s time to update your credit management practices

Three-quarters of firms will be updating credit management practices in 2004, according to a survey from the Better Payment Practice Group (BPPG).

The survey, which polled more than 400 businesses, revealed that most firms are expecting their late paying customers to continue with their bad habits during 2004, with only 18% expecting their customers to turn over a new leaf.

The BPPG has stressed the importance of having a good credit policy in place, which should be clearly communicated to every member of staff in the business. Many of the measures that need to be considered are basic techniques, but they can significantly reduce the likelihood of being paid late.

These include proper vetting of new and existing customers, the need to make terms and conditions clear at the outset, and the importance of a well thought out credit management/collection strategy in case of default.

It’s never too late to improve credit management practices. As our survey shows, it’s highly unlikely that late paying customers are going to change their tune without any pressure to do so from the supplier. Businesses need to take preventative steps to minimise the impact of late payment, and not be afraid to protect their cash flow, says Dominique Vaughan Williams, member of the BPPG, representing the Association of British Insurers.

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