You've just got a new customer - great news and well done !
But what steps have you taken to ensure that they will ultimately pay for your service or product?
Here are some of the best practices you should consider implementing before you accept any new orders :
1. Do a background check on your customer. What is their current financial position? Do they regularly pay on time? Companies such as Dun & Bradstreet provide excellent reports on company information and will even provide you with a credit rating for your prospective customers. If this credit check is negative I would strongly suggest that you open a cash only account until their situation improves.
2. If this will be a regular customer discuss with them their planned monthly orders.
Base your credit limit on one month's orders. Thereby limiting your exposure until they have built up a positive credit history with you.
3. For large projects request a deposit up front and agree stage payments until the project is complete. If they won't pay you some money up front now why assume they will pay the full amount later?
4. How do they plan to use your product? Will it be incorporated into their manufacturing process and sold on? If so how long will it take them to get paid? A common statement is that you will get paid when they are paid. Can you wait that long for payment? This will be especially important if your order is of high value.
5. When selling services and perishable products always aim to set your customers up on direct debit. You can still offer credit terms however you control the request of their payment directly from their bank / credit card on an agreed date. Software such as Autopay (Mercury Software) is affordable and will help simplify this process.
Remember if you are in doubt always request payment upfront. You may even find yourself rejecting the order but you will probably also have just avoided a bad debt.
We are all guilty of being eager for that next sale but an order only becomes a sale when the money is in the bank!
Business will always be about taking risks but great businesses take calculated risks.
Could your business benefit from the implementation of strong accounting procedures?
If so call us today in confidence on 01 6877190 or visit www.sgk.ie for more information.
