Is your credit appliance practice hurting your industry?
We are in uncertain times, every enterprise buck has to add up the debit of any cash out the back door by any unsettled accounts and can hurt cash flow. The way you use credit application could be creating problems in getting your customers to pay accounts, which long term, could impact your company and its processes. The stipulation of credit remains the foundation of problems for New Zealand businesses, enabling one entity to do industry with another while providing goods and services on a basis of reliance. At the same time, those goods and services must still be paid for within an agreed time frame if the industry is to last, and avoid using any form of Debt Collection
In a perfect world it’s a great arrangement - that is, until the unscrupulous take advantage and break the rules forcing the enterprise to protect its income by minimizing its exposure. To protect itself, a enterprise must actively take steps to mitigate debit or potential future losses caused by customers who do not pay on time, or in some instances not at all.
Indeed, It never ceases to amaze me how overlooked the value of the Credit Application is and how businesses are all too often primed to spend more on other documentation instead. As a result, businesses are often left open to abuse due to deficiencies in the document, or when there is no document at all.
To have an successful and worthwhile industry long duration they must be capable to have an effective for of debt control to avoid using the services of a Debt Collection Agency, which is something that should be considered if clients are not paying on time.
There are a number of specialist debtors who are experts at exploiting the weaknesses of a company’s credit agreements and its credit authorization processes which often allow the debtor to walk away from overdue financial records. Unfortunately, in such cases, the law does not view such matters in the same light as shop theft, for instance, though in my opinion, it is much the same.
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