Establishing an effective strategy for managing credit within a small business is crucial to its success.
Christopher Niesche, for the Examiner, offers five steps that can help small businesses keep the cash flow steady and minimise the worry of unpaid bills.
1.Establishing terms of trade from the start can help to give clarity to both trader and customer.
2. Running background credit checks on potential customers can be an advantage, providing useful knowledge before entering into a financial agreement.
3. Secure debts as insurance against insolvency. Niesche adds that recent changes mean that small businesses can now be secured creditors, offering additional protection in the event of insolvency.
4. Be punctual when sending out invoices, says Niesche. Keep to timescales as agreed to in the terms of trade and employ a means of flagging overdue invoices promptly. Send the customer a reminder for unpaid bills.
5. Use a third party, such as a lawyer or mercantile agent, to recover debt in the event of persistent non-payment.
Source: http://www.examiner.com.au/story/1529026/how-to-manage-your-credit/?cs=9
