In my experience many businesses do not have credit management plans or any credit policies in place. Managing your business cash flow can be the single most important thing that can make or break your company, no matter if you are a new business or have been around for many years.
There are some things you can do to make this credit management easier. The first thing is to manage your receivables, or hire someone to do it for you. Managing your receivables means you keep an eye on them, you stay on top of payments and run aging reports, and look at them! Another thing you need to do it make it as easy as possible for your customers to pay you, offer different types of payment options such as cash, credit or online payments. One of the most important things you can do to manage your business credit successfully is to have a credit policy in place with payment terms and that you can stick to. It doesn’t help you to have a policy that you don’t follow or that doesn’t work for your business. You need to do the same with your collection procedures, make sure you have collection policies in place that are easy for you to carry out. You also don’t want to forget accounts payable, keep your eye on your payables reports as well.
The skills and resources you will need in order to successfully manage your business credit are:
Signed and filled out credit applications
Full knowledge of the FDCPA and any state or other Federal collection laws
Skip-tracing or location skills or resources
If you find these steps overwhelming or something you are not educated about and you don’t want to dive right in, you may want to hire someone to be your credit manager, collections person or accounts receivable clerk to handle these aspects of your credit for you. If you decide to hire someone else to take on these tasks for you do some research and talk to other business owners who may have done this. You will want to have a clear understanding of what a bill and/or account collector does, for example, they collect payments by phone or by using letters to collect payments on past due invoices. They may negotiate repayment plans with customers and help them find solution to get the bills paid off in full.