Date: Dec 03, 2019
Category:

As covered in last month’s Part One blog, attorney Bart Botta laid out some of the industry’s best practices in ensuring shippers get paid on fulfilled sales transactions. Now that your sales documents are in order, and you’ve properly vetted the new customer, everything should be set for selling to this customer. Once your sales staff start selling, it is important that they are mindful of credit limits you impose on new customers (and that these credit limits are set low with new customers until they develop some good credit history with your company).

Making sure your sales department is aware of credit limits with customers is always a good idea. When you first start selling to a new customer, you do not have any sales history to rely on for credit decisions regarding the new customer. Sometimes sales staff just want to keep selling, but setting, and more importantly, monitoring credit limits is a key part of keeping accounts current (by making sure customers do not fall behind in the first place).

Your focus, once selling to a new customer begins, should turn to staying on top of that customer to make sure they do not start paying more slowly with each order. If a problem arises with a sales account, such as a customer exceeding its credit limit, or falling behind in its payment terms, it is crucial to act and execute quickly when there is any sign of a problem. 

Successful credit managers tend to develop great instincts to anticipate when a customer may be heading into financial trouble. However, with a new customer, it is not as easy to do so. Therefore, acting quickly becomes an even more important defense to make sure a slow paying customer does not turn into a no-paying customer.

Also, while as an attorney, a bias may exist in favor of contacting an attorney sooner, rather than later, the fact is that attorneys can apply pressure to a non-paying buyer. Not all situations warrant turning a collection matter over to your attorney, but often times, the sooner you act, the more likely you are to collect the balance due. Therefore, if the account has gone beyond terms, and the buyer is not taking your calls any more, it is probably time to call your attorney.

Finally, as discussed, having a standard operating procedure with specific details on how to deal with slow paying customers, when to get your attorney involved, and when to file a lawsuit, is a very important part of your strategy. This will ensure that you do not have to waste time making decisions as to what to do next when a customer starts showing signs of financial problems.

Bartholomew M. Botta
Partner Rynn & Janowsky, LLP

WG Staff Contact

Bryan Nickerson
Manager, Trade Practices
949-885-2392

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