Handling late payments -- and avoiding them

Handling late payments -- and avoiding them - http://www.kansascity.com Avatar Posted by TimJustus under Finance
From http://www.kansascity.com 4450 days ago
Made Hot by: on March 18, 2008 7:57 pm
The proven way to handle late payments is to avoid them. This begins by developing a comprehensive credit policy and then implementing it from the start.

Before extending credit to new customers, qualify them and verify their creditworthiness. Consider a banker's expectations when lending to you.

First, ask your customer to complete a credit application containing all the information you need to both bill and follow up with the customer. The application also should include the owners or officers of the corporation, credit references and banking information. This sets the stage for implementing a collection process in the event the customer fails to pay.

The critical next step is to verify the information. Only then should the customer be authorized for an open account sale. Approval limits and terms should be set and understood from the start and reviewed periodically.

Even creditworthy customers may delay in making payments, so it is important to execute your pre-sale and collections process consistently. The collections process begins, after the sale, with timely accurate billing followed by timely and accurate application of payments. Thereafter, a weekly aging of all unpaid balances in 30-day increments is suggested. Any invoices over 30 days (assuming net/30) should result in consistent action by phone or mail.





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