Trucking Invoice Factoring

Good Credit Management  Recommendations &  Help About Collecting Unpaid Sales Invoices 

The survival and  success of all small, medium and large businesses is  contingent upon receipt of payment from customers in respect of the product and services that the business provides and invoice for. It is not  enough to  get the sales order and provide the product if that sale can not be converted into cash. Cash is the lifeblood of every business and if debtors don’t pay  overdue invoices  without delay it can  lead to  calamity. Also see Trucking Invoice Factoring


 Numerous businesses are forced to  provide credit terms to customers in order to remain  very competitive and  earn orders but this has a  bad effect upon their cash flow. The damage caused by non payment (bad debts) can also be  substantial, and the longer the period of credit that is offered the more opportunity there is for the customer’s circumstances to change, and  therefore payment  to become delayed –  in many cases permanently. The secret to success is good credit management and credit control.


There are two  components to  effective credit management. The first is taking care in choosing the businesses that you will  grant credit terms. The second is to  build and employ an effective system of credit control  strategies to collect unpaid invoices.




The following  suggestions may be  valuable when deciding  whether to offer credit terms to a customer:.


• Always confirm the exact trading name of the customer e.g. XYZ Limited; XYZ Plc; Mr X and Mr Y trading as XYZ; or Mr X trading as XYZ.  Everyone these are  exclusively different and knowing the exact trading name  could be  crucial in pursing a customer for payment through the legal system, should the need arise. The customer’s headed stationery, business cards or brochures can  usually be helpful in determining the exact name, although  bear in mind they  could be  inaccurate.


•  Give the minimum credit period that will be competitively  advantageous. The longer the credit period the more chance there is that the customer’s financial  situations may change.


•  Ensure that you have all the customer’s contact  information: addresses, phone numbers, fax numbers, mobile numbers, email addresses etc. If possible, take the contact details of the prime movers. These  could be extremely helpful if you need to contact the customer regarding unpaid invoices  in the future.


• Trade references  may be  useful but most businesses will have at least a couple of customers that will  swear by them.


• Credit  info about customers can be  bought from a variety of  service providers. This can give you  knowledge into the financial position of a business. You can also ask the customer to provide you with financial information about their business.


• If a  sizable amount of credit will be at stake  think about  checking out the customer to  validate that the address given exists. A  lot of  details about a business can often be  acquired just by visiting their offices and noticing what is going on e.g. are they  hectic or is trade slack?


• Ensure that the customer has  noticed your terms of trade and has accepted the credit terms that you have agreed to offer.


•  Ensure that you  learn about the process for submitting your invoices and  getting payment from the customer e.g. who do you  give them to, when is their check run etc




The following  pointers and hints may be useful in  making certain that you have an effective credit control process in place to collect unpaid sales invoices:.


•  Learn the customer’s payment process and procedures e.g. if you know the date that they undertake their monthly check run you can time your statement  properly.


•  Look at “pre-dunning”, calling the customer before payment is due to confirm that your invoice has been received and that there are no  causes for non payment.


•  Start a systematic approach to  sending out statements, sending chasing letters (which gradually become firmer) and calling the customers.


•  Maintain copies of any correspondence and notes about telephone conversations. Confirm conversations in writing and  preferably gain the customer’s written  deal to any payment  vows.


• Try to call back and speak to the individuals concerned  instead of leaving messages on answer machines.


•  Look at other  techniques of contacting debtors e.g. text messages to mobile numbers or email and fax.


•  Be sure to remain calm but  self-assertive on the telephone.


•  Look into promptly on any broken promises of payment.


• Shorten the process by emailing or faxing documents rather than posting.


• If  vital consider  ceasing further  shipments once invoices are overdue.


The field of credit management and credit control is  large and these are only a few key points to  take into account.  Lots of businesses have staff in-house that undertake this  work with them but there are  other options.


Factoring companies  are experts in out-sourcing such services for their clients. They have specialist staff that can  carry out the collection of your sales ledger for you and  oftentimes this can be achieved with cost savings. The cost of  invoice factoring should be  examined against the cost of recruiting specialist staff or  taking on the task yourself. See Trucking Invoice Factoring


It is also  feasible to receive bad debt protection (also called non recourse) which can  minimize the need for you to  bother with which customers are credit worthy. The  receivable factoring company will research the customers standing for you and they will grant a credit limit  for each and every customer.