The following real life example illustrates why you should always get your credit application forms and personal guarantees verified before you extend credit to a customers. It also illustrates why you should engage a debt collector even when you think it is unlikely that the amount can be recovered. 1. The Facts In this real life example a client asked us to assist with the recovery of an outstanding [...]
The following illustrates why a business has to always be careful before extending credit to customers. It is always better to turn business down than to extend credit and not receive payment for your products and services. Losing a customer because you have refused to provide credit may impact the growth of your business but not receiving payment for your products and services may cause your business to fail. [...]
It can be easy to provide credit. You can be swayed thinking that your new customer is going to be one of your best – so really is there that much risk in providing them some credit? You have crosschecked the credit application against an ASIC search and there are no discrepancies - so what could go wrong? You find out 6 months later, when you are at risk [...]
Considerable care should go into the structure and layout detail of your company “Credit Account Application and Agreement” and “Applicant’s Guarantee”, as poorly prepared credit control may result in future bad debt and inability to recover. The same applies to poor office procedure and control for inspection of returned applications, as selective filling out of detail by the applicant can result in the loss of future debt recovery. This [...]
As a business you must always be aware and make informed and careful decisions when dealing with other companies. This is particularly important when providing credit facility on the sale of goods and services. This article is not personal advice, simply a discussion paper on the topic. Parent or Holding Companies and Credit A situation to be aware of is when a trading company seeking credit from you is [...]
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