Trade Credit: How to get paid what you are owed
As a business, if you’re extending credit to your customers, then you’re operating based on the trust that they’ll pay you in due course. Unfortunately, some companies won’t be able to meet their duties and will default on their payments.
The success of your business relies on you eliminating as many of these potential defaulting clients as possible. Here are some of the ways you can actively work on to improve your credit lending.
Have robust terms of trade
Your terms of trade outline your policies around payments. This includes prepayment, down payments, discounts for early settlement, payment frequency and timing, actions to be taken in the event of a default, etc. You need to review your terms of trade frequently to ensure they meet your requirements.
“We come across companies which have no terms of trade signed; a total no-no if you are offering credit terms,” explains David See, GM of ICMS CreditSystems and Waterstone Recovery. “The worst is when there is a signed terms of trade, but the company has lost it and it cannot be found.” Don’t make this mistake – get your terms of trade sorted.
Conduct a credit check
It may seem self-explanatory to conduct a credit check before you lend stock out to a client on trade credit. However, many companies find the process so cumbersome that they choose to omit it altogether. Instead, use a tool like 1Centre that allows you to conduct credit checks automatically. You can do this from any computer in the world, based on the cloud.
With 1Centre, credit checks will be fast, effective, and hassle-free. They’ll give you all the insights you need to make an informed decision about working with a particular customer.
Get all your staff involved. Enable your staff to become invested in the company’s success. You can do this by giving them access to, updates on, and the chance to influence accounts receivables. If staff understand the importance of this aspect of your business, it helps them to be active in chasing payments and pushing for disputes to be rectified.
Read more articles related to this topic below:
- Enhancing Trade Credit Security with Biometric Verification
- Why Australia’s Construction Industry Needs Trade Credit Automation
- Beyond Insurance: The Case for Trade Credit Assurance
- Data Zoo Announces Partnership With Trade-Credit Platform 1Centre
- Managing Risks in Hiring Equipment While Giving Trade Credit to Small Business Owners
- 5 factors to look for in your trade-credit software
- How AI and automation is solving Credit Management headaches
- SaaS automation applied to identity fraud in trade credit
- How electronic signatures meet global standards
- Trade credit & COVID-19: The early bird catches the worm
- The Top 5 Benefits of Storing Data in the Cloud
Follow Us
Are you ready to process trade credit applications faster?
Hi there, we’re 1Centre! We’re determined to make B2B trade faster, easier and smarter. Are you ready to transform your current processes?
Helping business, get on with business
1Centre is a purpose-driven Fintech platform that makes it easier for businesses to trade effectively. By automating inefficient people processes, finance and sales teams have more time to focus on more strategic work like building growth.