Don’t let bad debts squeeze your wallet.
We all have a lot of sympathy for the many businesses destroyed by the Draconian measures taken to stamp out Covid-19 from New Zealand.
We have suddenly moved into a new business environment. There are going to be those walking a tightrope to survival. Others will desperately try to trade with no real hope of their business recovering. Some of them might be your customers.
Normally, if you buy something, you pay for it and take it away. For some businesses, such as builders, this is not always practical.
What can you put in place to get as close as possible to this ideal situation? I’m sure you’ll think immediately of getting deposits, progress payments and so on.
Some businesses have to give credit on the basis they do the job and then send the bill. These are the ones who must focus on collecting their debts as quickly as possible. They should set their terms of payment as short as they can and they must continually follow up the slow payers.
Have you ever thought of following up before payment is due? The following is a letter received recently:
Hi XYZ,
Hope and trust that you and your family are well and safe.
Just a friendly reminder that invoice I4068 for $2,000 is due tomorrow.
Regards . . .
We suggest you choose carefully to whom you give extended credit. If you offer an arrangement for payment and it’s accepted, look after the person who pays on the agreed basis, but be wary of anyone who abuses your kindness.
Constantly having to chase up to get paid takes your time and you might be better off without that customer, who might in due course turn into a bad debtor anyway.