Despite many warnings and scares many companies are still failing to
adopt a robust approach to their financial controls.
These
companies fail to recognise the need for strict discipline in respect of stock
turn and control but what is even more disturbing is the reaction to the
debtors’ book.
As more and
more customers seek actively to delay payment this element of business policing
is even more critical.
When a
customer exceeds the agreed payment terms, they are in reality using the
supplier as an alternate (unsecured overdraft).
If left unchecked this situation can
spiral out of control so that in a
worst case scenario the supplier is forced to keep “supporting” the errant
customer for fear of realising a bad debt.
Think of
the parallel to the recent Eurozone debts (Eire/Greece etc.)– it is a slippery
path.
Without a
vigilant approach it will not be unusual for payment terms of 30 days drifting
into 60 and beyond. The implications for your company’s financial position is
all too obvious.
No comments:
Post a Comment