It is vital that compliant Terms of Trade, a proactive Debt Recovery process and Credit Checking of Clients is in place when credit is provided for amounts as low as $500.
I recently attended a meeting with a large company in the marketing and telemarketing sector based in Berkeley Vale on the Central Coast. They advised that 60 to 70 percent of their clients are small businesses with accounts up to $500 (unsecured), that are allowed to continue to trade for 90 days plus, without Terms of Trade in place. Since the initial meeting where we uncovered the cause of their cash flow being the lack of an adequate credit management system, the directors have moved to address the problem emphatically by implementing up to date Terms of Trade and outsourcing debts at 90 days overdue for EC Credit Control to recover. In addition the directors have decided that for larger accounts up to $10,000 a credit checking system with Veda is mandatory to ensure peace of mind for these larger extensions of credit (a decision made by directors).
In the current commercial environment, any business that does not have a comprehensive credit management system in place as a credit provider is at great risk. This is one of the biggest mistakes business can make as any business, no matter how long they have been trading for, can suffer from unpaid accounts.