Credit Management Tips for New Zealand BusinessesPoor credit management can put you out of business. Every year thousands of New Zealand businesses fold. For many, it's poor cash flow that caused their demise. One of the main reasons for poor cash flow is poor credit management.
Good debtor management is really not all that complicated. Unfortunately though, for a lot of folk it involves going outside of their comfort zone in terms of communication. It also requires a systematic and consistent approach - something else that is not as evident amongst New Zealand businesses as it might be. So, here are a few straightforward tips that, if applied consistently and systematically, will ensure slack practices don't put you out of business: 1. Give less credit.Don't give credit if you don't have to. Make it clear that you expect payment on delivery of the goods or service. If it suits your business, don't allow the customer to access the product/service until they've paid.
2. Get your terms and conditions right.Make sure that it is clear to customers that there will be penalties for late payment and that debt collection cost will be added to the bill if necessary. You should have this written into any contracts that the customer will sign, and also have it clearly displayed on signs in your reception area or on other communications that the customer will see before they engage your services.3. Have a system.Be clear with your team and yourself what the rules are around credit management. Who gets it, who doesn't. How long for ? What are the penalties for late payment ? At what point are debts passed to a debt collection agency ? Make sure this is written down and that it is clear and easy to understand. Refer to the rules when discussing the issue with staff.
4. Collect information.When you give credit to people, you should collect as much information as you can about them. Ask to see a driver's license or passport and note the number. Ask for evidence of their street address. Perhaps an alternative contact person. When they contact you, update their details. This will make it much lesss likely that the individual will be able to avoid responsibility for the debt in the future if they do not keep up their commitments. This information will help the debt collection agency work on your behalf if you have to engage their services.5. Use a a reliable and professional credit management agency.If you have an ongoing relationship with an experienced and professional debt collection agency, you will be able to systematise your referral of bad debts to them. This will ensure that bad debts are dealt with before they become too old. This will maximise the amount of money that is ultimately recovered for you.Free Audit ToolClick the link below to order your free Total Debt Solutions credit control and terms and conditions audit tool. This simple 20 question check list, asked and answered, will help you ensure your credit control systems are up to scratch. I would like to order my free credit control and terms and conditions audit toolHome Contact Debt Collection |