Creditprousa's Blog

October 28, 2011

When is it time to enlist the services of a credit professional?

If you are a small business that offers some or all of your products and services on a credit basis or terms exceeding COD, you may find yourself in one of the following scenarios:

1.  You are too busy with the other facets of your business, i.e., increasing sales, marketing, managing or supervising, to devote the necessary time to credit and collections.

2.   You are uncomfortable contacting your customers to request they pay a past-due balance or to advise them that you cannot extend further credit until the account is brought current

3.   You find your efforts to collect your receivables are becoming less and less effective because:

  • Your customers have grown accustomed to you personally calling them and they have found ways to persuade you to give them additional time to pay, or worse yet, are now totally ignoring you and indifferent to your payment requests.
  • You lack the negotiation skills that are necessary to convince your customer that they must pay their account balance.
  • The quantity of accounts that require collection efforts exceeds the time that you have available in your schedule.
  • There is little or no cooperation and/or communication between your internal departments i.e., between the credit and sales department to resolve issues with existing customer sales and balances.

If any one or all of these scenarios is applicable to your particular business, a lack of action on your part will only increase the possibility that many of your accounts receivable will continue to be delinquent, or worse go completely uncollected.  CreditPro Financial Services, LLC, can help you avoid these costly situations by acting as your in-house Credit Department and intermediary to effectively collect your accounts.  Where applicable, an experienced credit professional will come to your office, review your accounts receivable aging with you, understand what is expected and professionally make all of the necessary contacts with your customers on your behalf to affect payment of the accounts in question.  You’ll have all of the benefits and experience of a credit manager at your disposal at rates far less than employing a full-time credit manager or credit team.  Contact CreditPro Financial Services, LLC today for a no-cost, no-obligation assessment of your business by telephoning 216.402.9988 or visit our website, www.creditprousa.com.

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October 26, 2011

How Long Is Long Enough?

From time to time, every merchant that sells on a credit basis must make a determination whether to continue selling to a particular customer that does not pay within established credit terms.  In a good economy, it is much easier to deny the continued extension of credit to an existing customer that consistently pays late and replace them with a company or firm or individual will pay in a more timely fashion. In a troubled economy however, almost every business struggles to get new business to keep, maintain or increase their market share, much less be selective in its selling process.

Consequently, as a business owner, company president or sales director, you make must the choice to continue extend credit to a customer, or deny them the further extension of credit.  Several factors should be included in your decision making process, but one of the most important if not THE most important factor to consider is whether you are making enough profit on your particular customer to absorb the costs for the extension of credit?  For example, a customer that owes $10,000 for a product or service translates into a cost factor to you of $600.00 per year, $50.00 per month, or approximately $1.65 per day at a nominal borrowing rate 6% per year until the money is paid:

($10,000.00 x 0.06) = $600.00 ÷ 12 = $50.00 per month

 

OR

($10,000.00 x 0.06) ÷ $600.00 ÷ 365 = $1.65 per day

Not a big deal right?  Wrong!  Let’s look at that same example using 50 or 100  accounts (a pretty good customer base for a small to medium sized business).  Using that same outstanding balance of $10,000.00 for 50 or 100 accounts the expense to extend credit increases to an annual rate of $30,000.00 or $60,000.00 respectively!

To increase cash-flow, minimize your expense and collect your receivables in a more timely manner, you know you need the services of an experienced credit professional. CreditPro Financial Services, LLC, has competent credit and collections professionals available to provide its vast array of services to you on an as-needed basis for less  than it would be for you to employ a part-time clerk.

Please call 216-402-9988 or

visit us on our website, www.creditprousa.com

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