It’s absolutely amazing to me how many companies don’t have a written credit policy these days! If you don’t know or have a written credit policy it’s going to be next to impossible to get your customers to stick to any real payment terms, making it easy for them to fall behind and this can cost your company big time! Not only do you lose valuable cash flow but time and money spent on collecting past due accounts can be damaging to your business because you are spending time with bad paying customers and sometimes neglecting good paying customers who deserve your attention.
Having a written credit and collections policy and then distributing to both your customers when they are first approved as well as to your sales department is a great idea. Also I would recommend that you redistribute to your customers at least once a year so that they can keep track of any changes or updates to your policy, this also a great time to get updated financials and review your customers for changes in their credit file.
Get your sales department involved!!! Another helpful idea is to get the sales staff on board with your credit policy too. Making sure that the sale’s staff knows and adheres to the credit policy is just as important so that the sales department isn’t undermining what the credit department is doing. One way to do this is to have a quarterly meeting with the sales staff to make sure that everyone is following the proper channels to make sure the company is strong financially when it comes to extending credit. This will make it easier for the sales staff if they don’t have to chase clients for money and can focus on sales for the company! Your sales department may be frustrated with the credit department from time to time but the reality it that one can’t live without the other and things always work better when every one is on the same page and working together.
