It feels so good when after months of hard work, relationship building and negotiation, the large order finally arrives. But getting on with the job and leaving the paperwork for later can have serious consequences when it comes to obtaining payment!
Although any genuine business owner/director will be happy to provide information about their creditworthiness, all too often, we don’t ask for it.
A few years ago, a spokesperson for the British Chambers of Commerce suggested asking for payment in advance in the wake of recent late payments reports, which suggest that small and medium-sized firms in the UK are owed more than £10 billion on any given day. In reality, this isn’t always possible.
So if you are one of those businesses who have to give credit in order to stay competitive, don’t feel embarrassed to ask the new client for:
- their exact name and legal status (watch out for franchises with many different legal entities or Jo Bloggs trading as B Smith)
- the customer’s headed paper to verify the company details
- the billing, trading and registered address
- the ordering process and who authorises purchase orders
- references from other suppliers
It also makes sense to run a credit check, or at least run a free check at Companies House.
It might feel like additional time spent on administration but it will pay off later on when it comes to payment, trust me! However, if you still feel uncomfortable raising the type of questions above, think of advancing credit to a new customer as if you are lending them money, and ask yourself, “Would I lend money to a total stranger?”