Post 2008, no one can afford to treat credit management as the 'poor man' of corporate strategy; thanks to the crunch, credit management has become a core business activity practically overnight. It is now much harder to rely on borrowed funds in order to keep trading - and consequently vitally important to learn about and use professional credit management techniques and systems that are designed to work NOW, in bad times, to improve your company's cash flow, reduce its exposure to late payment and bad debt, and cut back on its need to borrow.

Collection
Attitudes and techniques that were appropriate, and which worked well in the past, need to be adapted if they are to work as well in the current economic climate. 2009 demands a more imaginative, flexible, patient approach to collection, better communication and mediation skills, and a greater willingness to compromise and look to long term goals rather than short term gains.

Now is not the time to insist on immediate settlement, make unrealistic demands or take inappropriate action - or to place too much reliance on the Court system. Settlement offers that would have been unacceptable pre 2008, for example, need to be considered carefully, because even if such proposals fail and instalments cease within a few months they are still likely to offer a better return than anything you might receive as a result of issuing costly legal proceedings - particularly as Court fees for debt proceedings seem set to rise by 233% if Ministry of Justice proposal are accepted.

Issuing Legal Proceedings
Legal proceedings obviously remain an option if a proposal falls to the ground, but they should only be considered if there is a reasonable chance of recovery; there is no point in throwing good money after bad. The Register of Judgments, Orders and Fines, The Individual Insolvency Register and any one or more of the many available debtor registers will enable you to find out more about your debtor's situation before you decide to issue proceedings that might be doomed to failure. Don't rely on other people to do this for you. Checking these registers should be as automatic as getting a credit report on a potential (or potentially defaulting!) customer.

Insolvent Customers
If your debtor proves to be - or becomes - insolvent, you should not assume that to be the end of the matter, or that your debt is no longer worth pursuing because there is nothing in it for you. Insolvency is on the increase, so following up on any correspondence received in respect of insolvent customers and registering claims for potential dividends should form part of your everyday collection process. Dealing with insolvency is time-consuming and complicated; in the past it often did not get dealt with at all, and the debt was simply written off. That no longer remains an option; pennies in the pound are better than no pennies at all.

Prophylactic Tools
Adequate staff training, membership of a Trade Credit Circle and up-to-date professionally prepared basic credit documentation are important credit management tools. These tools, too, were often neglected or ignored in the safer, warmer economic past - or just pushed to the bottom of a long list of things that people intended to do tomorrow - but that no longer remains an option either, because the protection they offer is something your Company needs today.

Spending on education, information and documentation is spending to save. Sound, up-to-date, professionally prepared documentation is an important safeguard against potential customer failure; access to the sort of reliable 'inside information' that can be gained through membership of a Trade Credit Circle can make it easier for credit personnel and senior management to make good judgement calls as to whether to begin or continue to trade with a particular customer and on what terms, and training in communication skills and stress and anger management for all credit personnel and senior management can avoid a lot of expensive and distruptive absenteeism.

What we can do to help
Metliss Barfield offers a range of flexible, cost effective outsourcing options that enable you to choose the services you need when you need them, and enjoy the security of a quality support team with no on-going financial commitment. We can deal with your difficult or disputed accounts, ensure that your documentation is as failsafe as possible, and take on the burden of dealing with insolvency practitioners. We can administer your Trade Credit Circle - or find or create one for you. We can advise on credit systems, design a Credit Policy for you, train your personnel to cope and communicate better, and generally make life more productive and profitable for your Company and more fulfilling and enjoyable for your staff. And we think you will find our Blog an interesting and informative free guide to Staying Sane & Solvent through the crunch.

Find out more about us and what we can do to help you over the coming year by exploring our site. And if you need more information, please don't hesitate to contact us.