A RECESSION that just won't quit is forcing business owners to rethink their credit and collection policies, according to entrepreneurs. Ways to speed collections * Check references or run a formal credit check before you close a sale. * Follow up quickly on past-due accounts. * Put slow payers on a COD basis. * Consider hiring an attorney to place a lien on a delinquent account; or turn it over to a collection agency.
Finance Economy drives firms to change credit policies Ways to speed collections ■ Check references or run a formal credit Companies tighten collection terms, offer incentives to customers who pay on time check before you close a sale. ■ Follow up quickly on past-due accounts. BY MARTIN C. DAKS Cash Flow Management ment services. “I now get an upfront payment of ■ Put slow payers on a COD basis. A RECESSION that just won’t quit is forcing at least 40 percent from new customers, and I ■ Consider hiring an attorney to place a business owners to rethink their credit and “I know that many of my clients are hurt- offer [existing and new] customers a discount if lien on a delinquent account; or turn it collection policies, according to entrepreneurs. ing, but I’ve got to pay my vendors too,” said they pay promptly. The economy has changed, over to a collection agency. The easy-credit approach that helped many Dao, founder of Dao Consulting Services in and I had to change too.” ◆ Source: NJBIZ interviews businesses boost sales — and was popular Nutley, which offers program and staff develop- E-mail to email@example.com until well into 2008 — is being swapped for a more cautious approach. “We can produce our products and sell them, but our biggest fear is whether we can collect on the receivables,” said Bill Swanekamp, president of Kube Pak Corp. His second-generation Allentown business sells flowers and other nursery-related products to wholesale and retail flower and garden shops. “Last year we wrote off more bad debt than ever before,” said Swanekamp, who tries to limit his exposure by putting new customers on a plan he calls PPI, or Pay Previous Invoice. “A customer can get the first delivery on credit, but we won’t extend any additional credit until the first invoice is paid in full,” he said. “Then the second invoice has to be paid before they get a third shipment, and so forth.” Swanekamp also takes a harder look at references before he extends credit. “Previously, if we checked out five refer- ences for a new customer and one or two weren’t great, we would give the customer the benefit of
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