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Tighten Up Credit Practices
– March 25, 2011
Poor credit policies can lead to disaster in today’s troubled economy. Former prompt paying customers that have become slow payers are probably an important danger signal. Here are several practices that can help with your credit policies:
- Make sure the due date is obvious on all invoices and that a penalty will be assessed for all late payments. A typical penalty amount is 1.5% per month.
- Consider offering discounts if your customers pay within 10 days.
- Don’t just send a letter to customers who are late paying as it is easy to ignore. Have someone call the customer and have them commit to a payment date and amount on the phone.
Stop work on services or stop goods from being shipped unless you receive payment. No one wants to lose a customer, but it might be better to lose that customer who doesn’t pay or has gotten in financial trouble.
This is Profit Enhancement Idea #48 in Heard, McElroy & Vestal's 100 Ways: The Profit Enhancement Process series. The purpose of the series is to assist business owners and managers in cutting costs and increasing revenues by working smarter, not harder.
Walker Coburn
318.429.2109
wcoburn@hmvcpa.com
Walker is an Audit Managerin our Shreveport office. He received his Bachelor of Administration in Accounting and a Masters of Accountancy from Millsaps College in Jackson, MS. Prior to returning to his hometown of Shreveport and joining Heard, McElroy & Vestal, Walker worked for KPMG in Jackson and Memphis, and more recently as a financial reporting advisor for FedEx Corporate.
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