New Year's Resolutions

It’s that time of year again. Time to resolve to better ourselves and the world around us. Here is my offering for the New Year.

Check for credit applications.
There is no worse surprise when you learn a customer is defaulting and you cannot find the original credit application. That means no personal guarantee, no signed acknowledgement of the terms and conditions, no signed attorney provisions. With the rise of company failures, now is the time to check all of our customer files and make certain you have this important document and if you do not, get one.

Up date your credit files.
Now is a good time to get a new credit report on all of your existing customers, particularly those with high balances or a recent trend toward slow pay. Pull a Dunn & Bradstreet, or Experian or Equifax report on your commercial accounts and look at the latest trends. The information may not have the most recent data, but they should contain information from at least three to six months ago. The failure rate for businesses is at an all time high and the reasons for failure are many. Rather than be surprised later, learn what is happening with your customers now.

Reassess credit limits.
As the economy crumbles, leaving companies weaker than they were a year ago now is a good time to take a look at the credit limits that were assigned back when times were good. You cannot afford to allow your customers to take on more than they can afford.

Resolve to take control of your collection calls.
It is not so bad in good times to accept almost any payment schedule the customer gives you. As long as they are paying, you can put up with a little delay. However, in times like these, every dollar counts. You should be managing the collections with the goal of shortening the time between sales and payment. Customers, who pay consistently late, may try to pay even slower. Your job is to get them to pay sooner, much sooner.

Resolve to shorten your terms of sale.
Your company probably needs cash. Now is a good time to make certain your receivables are not tied up with lengthy terms of sale that were beneficial last year but pose a real liability this year. It may be a good time to re-negotiate.

Resolve to communicate with other creditors.
Communication is power. If you do not currently belong to a trade credit exchange group, join one in your area. If you belong but have not been attending, make plans to make the next meeting. These groups can be an invaluable tool to learn the very latest on your customers.

Resolve to team up with Sales.
With sales dropping across the board, every sale and every potential sale is critical. Obviously you want to avoid those sales that are too risky but at the same time, you’ll be asked to take on more risk. The key is how well not only you, but the entire company strategically manages credit. Good teamwork goes a long way to making good sales.

Resolve to plot your progress.
Do not fall into the trap of having as your only report card your accounts receivable aged trial balance. All it shows senior management are accounts you have not successfully collected. Resolve to design your own progress reports that will show them your collection trends, delinquency percentages and the costs of litigation. While the DSO may be going up, you should be able to brag about something.

Resolve to fix disputes quickly.
Customers you do not agree with the bill, will not pay. Again, when every dollar counts, companies cannot afford to have any portion of the receivables bogged down by disputes. Too many credit managers wait for disputes to be resolved between sales and the customers. In these times, when sales should be out beating the bushes and turning over every rock looking for sales, they are not going to have much time researching disputes. Where you can, identify the problem and resolve to fix it. Your involvement may be the key to unlocking stubborn cash.

Resolve to be creative.
These are tough times. Success will come to the creative individuals that get us through them. It is important that credit people think creatively and not rely on the way things have been done in the past. Now is the time for good credit professionals to really show what they can do.

If you need any help with this resolutions, contact CREDITPOWERS. Check our our website: www.strategiccreditmanagementsolutions.com.

Your comments are welcome.

Happy New Year!