In times like these, every business dollar has to count and the loss of any cash out the back door by way unpaid accounts places needless pressure on the business cash flow.
The provision of credit remains the foundation of the `Money Go Round' for New Zealand businesses, enabling one entity to do business with another while providing goods and services on a basis of trust, but those goods and services must still be paid for within an agreed time frame if the business is to survive.
In a perfect world it's a great arrangement - that is, until the unscrupulous take advantage and break the rules forcing the business to protect its income by minimising its exposure.
To protect itself, a business must actively take steps to mitigate loss or potential future losses caused by customers who do not pay on time or in some instances not at all.
There is nothing less to our credit than our neglect of the foreigner and his children, unless it be the arrogance most of us betray when we set out to “americanize” him.
—Charles Horton Cooley (1864–1929)
In my capacity as Managing Director of DebtForce Limited, I see a great many companies spending thousands of dollars on loss prevention methods at the front of their business but fail to see what is slipping out the back door when the credit application and terms of trade are ignored.
Indeed, It never ceases to amaze me how overlooked the importance of the Credit Application is and how businesses are all too often prepared to spend more on other documentation instead.
As a result, businesses are often left open to exploitation due to deficiencies in the document, or when there is no document at all.
There are a number of professional debtors who are experts at exploiting the weaknesses of a company's credit agreements and its credit approval processes which often allow the debtor to walk away from overdue accounts.
The world is a puzzling place today. All these banks sending us credit cards, with our names on them. Well, we didn’t order any credit cards! We don’t spend what we don’t have. So we just cut them in half and throw them out, just as soon as we open them in the mail. Imagine a bank sending credit cards to two ladies over a hundred years old! What are those folks thinking?
—Sarah Louise Delany (b. 1889)
Unfortunately, in such cases, the law does not view such matters in the same light as shop theft, for instance, though in my opinion, it is much the same.
A credible credit application and terms of trade document should always be the critical starting point to covering that back door risk and a well designed document can afford good protection and suitable remedies when required when managed correctly.
The receiving of the signed credit application is only the first step in the credit approval process, before the formal information vetting of the application can commence.
To learn more about how a debt Collection agency can help you win this battle, check out the links below. http://www. DebtForce.co.nz is a Debt Collection Agency based in Auckland New Zealand with experience spanning 30 years.