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We consider what you need to be checking in order to understand if your customer can support the amount of credit you are granting.
What are the points to consider when taking on a new customer? Similar points may arise in regard to your suppliers. If you are starting, or have recently started a business in the Colchester area we, at Elizabeth Burden, can help you manage the credit requirements of the business.
Obtaining new customers is great for business, unless they fail to pay you. If you fail to check that the customer can support the amount of credit you are granting, then commencing legal action when they do not pay can be a long, drawn out and potentially costly process.
If payment from the customer is not obtained and the goods or services have been provided, your cash flow is likely to be under pressure. Ensuring that customers pay on time will make managing your business easier.
If you fail to pay your suppliers because you have not been paid by your customer then you could also be damaging their business as well. This is not only bad business practice but could be regarded as corporate social irresponsibility. Treat your suppliers as you want your customers to treat you.
The first thing you should do is get to know your customer. This should start before you take on a new customer and before you give them any credit. The bare minimum of what you should know is:
Before you provide goods or services to any customer make sure you address the following:
After you have provided goods or services to a customer ensure that you:
Remember that not paying your suppliers on time is a bad business habit and it may result in a drop in your credit rating. You should:
Some businesses unfortunately go ‘bad' so you may wish to consider obtaining credit insurance where the business:
Businesses should consider obtaining factoring and financing options when:
If you are struggling with credit control in these difficult times then we would be happy to discuss this further with you. If you are starting, or have recently started a business in the Colchester area please contact us at Elizabeth Burden for more detailed advice.
Why not contact Elizabeth Burden Chartered Accountants today for more information or a FREE no obligation quote.
On 21 December 2021, Chancellor of the Exchequer, Rishi Sunak, unveiled a £1 billion COVID-19 fund, including cash grants of up to £6,000 per premises for each eligible firm.
HMRC has reminded self assessment taxpayers to declare any COVID-19 grant payments on their 2020/21 tax return.