Spending time and developing good processes to minimise risk as your business grows is a must for any business. Businesses remain under constant pressure to maximise their cash flows in order to sustain and grow their business. Implementing procedures to minimise risk at all stages in the Credit cycle is imperative in order achieve this.
These processes begin at engagement with your new client. Have you checked their credit worthiness? Credit Reporting Bureaus are a good start rather than checking with their supplied referees and can monitor your ongoing clients. They can identify at risk debtors so that you can act early if necessary.
Ensuring you have up to date terms and conditions which are specific to your business practises are crucial. They must also include a default clause so that costs of debt collection can be added to the debt.
This will give you an edge over other suppliers for payment. (e.g. your business has consequences for not paying on time e.g. Mobile account or discount for paying utility bill on time).
Do you have a dedicated Accounts Receivable Manager or team skilled in debt collection who understand the importance of this role? Is there a specified process that they follow and do they know how to escalate a debt if it remains unpaid? Do you have a qualified bookkeeper and accountant engaged in your business? They will assist with the burden of taxation compliance obligations.