In this current climate more and more customers are actively delaying payment to suppliers. Slow payers monopolise profits and starve creditors of much needed cash.
Accordingly policing of receivables is critical.
When a customer exceeds the agreed payment terms, they are in reality using the supplier as an alternate (unsecured overdraft).
Left unchecked this situation can easily 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.
Take a long hard look at your accounts receivable – are you happy to see 30 days drift into 60 and beyond?
Not only is the profit margin eroded but the risk to the company is severely heightened. Sound companies do not need the financial support that comes from pinching credit.
Evaluate your customer’s performance and then ask “who is getting a free ride?”
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