In this issue
Advice for Meetings
Enchant Customers
7 Ways to Make Customers Enjoy Working With You
Control Your Debtors
Company Secretarial Q & A by Maria Fahy
Deadlines and Reminders by Sinead Herlihy
Parfrey Murphy: Chartered Accountants
October 2012

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Chartered Accountants
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Cork
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T: +353 (0)21 4310266
E: pm@parfreymurphy.ie
E-Newsletter October 2012Parfrey Murphy: Chartered Accountants
Control Your Debtors

Many businesses are too wary of being over-zealous when chasing payment so as not to upset a customer, but avoiding the issue could have a catastrophic effect. Here are ten tips for what to look out for and what steps to take:

1. Know your customer

Whether the customer relationship is new or long-standing, regular credit reports are essential. They are quick and cheap and enable you to be fully informed of any changes with the business. Perhaps you could use a particularly large order as a trigger to run a check or simply implement one every quarter or six months. As well as granting peace of mind it limits your exposure. The next stage is to identify and weed out any high-risk business prospects.

2. Assess payment behaviour

Keep an eye on changes in payment patterns, times and delays. These small factors can indicate something is happening behind the scenes. It doesn’t hurt to call the customer and have an informal chat, just to make them aware of your interest. These checks can also indicate how long you will be waiting for payment. Also be aware that bills being settled later and later each month is a key indicator of a business’s deteriorating cashflow.

3. Introduce changes

Your customers may just have a culture of late payment but to combat this, steps should be taken to encourage faster payment, such as direct payment methods or more creative collection strategies.

4. Carry out checks

Regular company credit checks will also highlight small but possibly significant changes, such as who is on the board and any alteration in the addresses of those members. Also for smaller and newly formed companies, cross reference consumer and business information to build a picture of the personal and wider business interests and the track record of those running the business. Knowing what happened in the past creates confidence in future co-operation.

5. Revise regularly

The validity and worth of credit reports lies in their frequency, which could be related to the value of business done, the importance of the account or the volatility of the market they are in. There is no point running one only at the start of a working relationship and believing that will ensure there is no risk.

6. Be aware

Be mindful of external economic pressures because if you are feeling them you can be sure your customers are, too. The warning signs these present can be more effective than any internal procedures and controls.

7. Be accountable

Often businesses with poor trading results tend to delay submitting their accounts as long as possible. Research has shown the late filing of annual returns is a characteristic of failing companies and at the very least can indicate a level of management inefficiency within the business.

8. Keep talking

Keeping communication lines open is key. As long as businesses are talking to their customers, resolutions can be swiftly and easily achieved without the need for legal action that can prove costly.

9. Take action

Don't delay. It’s tempting to wait and hope the payment will be made, but if the process is not started immediately, resolutions will take longer, putting cashflow under greater pressure and leaving you more vulnerable.

10. Call for help

While a business that can demonstrate a clear action plan is in place and was adhered to will more likely achieve a successful outcome, don’t be afraid to ask for help and advice. A quick chat with your accountant could help you identify the next most appropriate step. For example, a legal letter might be enough to bring the matter to an end.

If you wish to discuss the above, please don't hesiate to contact Noel Murphy on 021 4310266.

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