Credit Management Advice

Slow payment and bad debts can have a serious impact on the cash-flow and hence profitability of a business. The fact is that businesses, public sector and private individuals are taking longer to pay outstanding invoices and the longer an invoice goes unpaid the greater the chance it will become bad debt. In today?s increasingly risk-fuelled business environment the need for sound credit management and a professional Credit Policy has never been greater.

The true cost of bad debt :

Research* shows that SMEs write-off an average of £14,000 in bad debt per annum, which means that at a 5% profit margin they would have to make additional sales of £280,000 to make up for the loss.

The number of companies falling into liquidation leaped by 56% to 4,941 in the first quarter of 2009 compared to the same period a year ago. May of these companies are failing due to poor credit management which in turn has a knock on effect on their suppliers.

This guide is designed to help put you on the right track to better Credit Management, helping you to improve your cashflow and reduce the chances of bad debt.

See our cashflow calculator to find out what your current DSO is (day sales outstanding). This will give you a measure of how well your credit control is performing and show you what effect improvements could have on your cashflow.

For more information contact TAK Credit Management.