Good debtor management also means good relationship management. You are in constant contact with your customer, the ties become closer and then the customer is also more inclined to share problems. And to pay. But good credit management doesn’t just mean staying in touch, it also means taking appropriate action and measures.
Waiting too long is main reason for bankruptcies
When payment is not forthcoming, it is not convenient – especially now – to extend supplier credit longer than necessary and justified. Most cases of bankruptcy are related to and attributable to receivables that have been outstanding for too long, causing the total debt to increase to such an extent that one ultimately has no choice than quit. And that is such a shame, because precisely by delaying for a long time, you may lose coverage for your insured claim. Also, future deliveries are no longer covered. An important rule in debt collection is: the older the claim, the more difficult it becomes to collect. Your buyer also benefits from adequate accounts receivable management so that debts don’t keep rising.
How is your client really doing?
At the same time, that is the big question. Government support has kept alive many companies, which actually no longer have a right to exist financially: the so-called “zombie companies. Gradually it is becoming clear who has come through successfully in recent years and who has not, but still the true financial health of companies is being masked. And with today’s economy, things can get worse faster than you think.
Source: MODINT Credit & Finance