Economy drives firms to change credit policies by ProQuest

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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 mdaks@njbiz.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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