What is an Example of a Credit Policy?
Summary
If you use good cash management practices to protect yourself from your employees and co-workers, then shouldn’t you be taking the same precautions with those outside your business? It should be created in advance and take into account such things as its effect on sales, the impact on the company’s cash flow, and legal liability. Imagine the synergy created when accounts receivable, collections, sales and marketing, and even design and production all agree and cooperate in managing business customer credit. Apparently, as a matter of practice, this well-known businessman delayed payment of owed invoices until they fell into collections, and then he would attempt to negotiate to a lesser settlement amount. Eventually, however, the construction company had to tell their customer “you’re fired.” By the time they considered the delay, the collection efforts, and the reduced payment, they were lucky to break even.
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