Tuesday, April 20, 2010

Protect your business against bad payers

How to avoid unpleasant tasks and protect your company against bad payers

You are not responsible for a new customer's creditworthiness, right?

But if they don't pay, who is told to "look into it"? Who is asked "did we get the check?" When the answer is no, who is told to "take care of it"?

And when the check does not come-who gets yelled at?

As an entrepreneur the answer to these questions would be "YOU".

Providing references does not make a prospect creditworthy. Following up on credit references is not insulting. Asking creditors for key data is not nosy.


See that your credit application or other signed document gives you permission to contact references. Then ask each reference these 3 key questions:

1. "How recent was your latest transaction with this firm?" If it wasn't within the last 4 months, the information may not be of great value because your customer's financial position may have changed materially.

2."Are you related to the prospect in any way?" This may be difficult to assess, since people may lie. Use your instincts to decide how accurate the answer is and whether to probe further.

3, "Would you consider this firm a good, slow, or bad payer?" Talking to a few references now can save you months of stonewalling down the road.

An organized billing/credit and collection procedure ensures that you will be paid before others. In this economic climate it is critical to retain good client relationships. Let me help you put that in place. 1 Hour free consultation