Funding issues continue to impact on businesses with more and
more customers actively employing various tactics to delay payment to
suppliers.
Credit control and the monitoring of payments is an increasingly
important element for every business.
By exceeding the agreed payment terms a customer is using the
supplier as an alternate (unsecured overdraft).
This situation if left unchecked can spiral out of control. As
the situation deteriorates the supplier can find themselves in the invidious
position whereby they are forced to keep “trading” with the errant customer for
fear of realising a bad debt.
Think of the parallel to the Euro zone bail out situations – it
is a slippery path.
Slack policing of accounts receivable will have serious
consequences. At best tardy payments damage cash-flow and at worst can often be
the precursor of a company failing with the end result of a total write off.
An examination of most debtor’s lists will undoubtedly provide
examples of aged invoices where 30 day terms have drifted into 60 and beyond.
Consider the damage that is being done to your company’s
financial position and ask the question “why is this being allowed to happen?”.
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