CREDIT CORNER

CREDIT FOLLOW UP

 

 

Basic to all credit sales is the supplier’s collection policy.  If maximum sales are expected – by a liberal credit policy – then an aggressive collection policy must be maintained.  With a strict credit policy, the collection program may be more liberal.  Sales pressures these days call for a policy of more liberal credit granting and closer follow-up of customers for payment.

 

Most creditors report they are putting in more and more time in trying to keep customers on a prompt-pay basis.  By minimizing the costs connected with the follow-up of slow accounts (and charge-offs), the experienced credit executive is able to help his/her company maintain low prices and increase sales, which, hopefully, result in greater profits.  With consumer credit buying increasing, the extension of wholesale credit is expected to increase proportionately.  And, the percentage of past-due accounts is sure to keep pace.

 

To avoid unnecessary collection costs, keep your customers on a prompt-pay basis.  If promises have been broken and your own efforts have not produced a check, or some reasonable arrangement for settlement, an experienced, professional staffed commercial collection agency should be called to assist you with your more difficult collection problems.  Retaining good will is always important; but failure by your customers to pay or make definite commitments usually calls for more aggressive measures if your company’s interests are to be protected.

 

 

WHEN TO EMPLOY A COLLECTION AGENCY

 

• When indebtedness is 90-120 days delinquent
• Which inquiry discloses serious customer financial reverses, falling sales or other creditor collection action
• When costs of your own personnel’s efforts do not justify further time investment
• When a customer demonstrates bad faith and loses credibility