Is your customer having credit problems?
I had a potential client phone in yesterday enquiring about our debtor finance solution however after speaking with her for almost an hour I explained to her that we also help her business by monitoring her customers credit as part of the service, to my surprise she got a little upset and didn’t like the sound of this
“I don’t want you checking my customers credit, I’ve never had to in the past, people just pay”
I had to explain to her that we have helped a large amount of our clients by keeping up to date with their customers credit file and before taking on new customers submit them to us for approval to make sure they are of good credit and are most likely going to be able to pay all their invoices.
The problem arises when you are new in business and things are going great for a year or two. You then get excited and tempted to take on larger orders and extend more credit to your customers. Your customers always seem to pay on time but as the orders got larger and the amounts outstanding got larger things started to slow down or even stop unexpectedly! One of the most common problems I come across day to day is simply not having enough customers to spread your cash flow over, dealing with only a few customers or sometimes just the one can leave you open to the risk of your business being in dire straits if they become insolvent.
I have heard to often “they are a huge company there is now way they will go bust”. I think everyone knows by now that even the mighty have fallen and can still fall without taking the proper precautions before doing business with someone.
For credit reporting and checking other than AR Cash Flow we recommend the following:
Interesting news story from A Current Affair (usual stuff)