A guest post from Rita Adams at A.R.M. Credit Control:
It feels so good when after months of hard work, relationship building and negotiation the large order finally arrives. But getting on with the job and leaving the paperwork for later can have serious consequences when it comes to obtaining payment!
The new client obviously likes your product or service and although any genuine business owner/director will be happy to provide relevant information, we don’t ask.
A few years ago, a spokesperson for the British Chambers of Commerce commented in the wake of the Barclays Local Business annual Late Payments Report, which suggested that small and medium-sized firms in the UK are owed more than £10 billion on any given day. They suggested to ask for payment in advance but in reality this isn’t always possible.
So if you are one of those businesses who have to give credit in order to stay competitive don’t feel embarrassed to ask the new client for…
- the exact name and legal status (watch out for franchises with many different legal entities or Jo Bloggs trading as B Smith)
- the customer’s headed paper to verify the company details
- the billing address and trading address
- the ordering process and who authorises purchase orders
- references from other suppliers, run a credit check or at least check companies house (which is free)
It might feel like additional time spent on administration but it will pay off later on when it comes to payment, trust me! But if you still feel uncomfortable asking the questions above think of credit to a new customer like lending him money – would you lend money to a total stranger?
Rita Adams established A.R.M. Credit Control in 2004 and provides credit control services to SMEs and large organisations.
(The above post was first published in 2009)