Increase cash flow through credit management

Cash flow is enhanced with effective terms of trade.

Cash flow is enhanced with effective terms of trade.

Maintaining good cash flow is about more than just keeping your customers in check. One of the most effective ways to ensure prompt payment and avoid the debt collection process is to establish effective terms of trade.

Your terms and conditions of trade need to be carefully worded to afford you the best protection against late payments that you can possibly have. They also need to be correct to the letter of the law, which is why Commercial Credit Services makes use of our in-house solicitors, Aston Reid Lawyers, on behalf of our clients.

Establishing effective terms of trade

According to the Chartered Institute of Management Accountants, credit management is one of the primary ways in which your small business can protect its cash flow.

While standard terms of trade or credit policies may seem effective, they're not bullet-proof. By having a carefully considered policy crafted for your specific business and clientele, you can afford yourself protection you may not otherwise have had recourse to.

This can include indemnity from certain liabilities, retention of title to goods until invoices are paid and the ability to charge for late payments.

Of course, while we all hope most businesses would pay their invoices on time, it can be impossible to keep absolutely perfect accounts receivable records due to a number of factors outside of your control.

When a customer does become hard to handle or is operating outside the bounds of your credit policy, effective terms of trade will help make the debt collection litigation process smoother. While extreme measures aren't the first choice when it comes to getting invoices paid, when they are necessary you want to go in with as much backup as possible.

If you're unsure whether your terms and conditions of trade are assisting your credit department or holding them back, talk to Commercial Credit Services.