Advice

Based on current practices to put all the odds in your favour in order to guarantee payment of your invoices. It’s the preliminary work undertaken by the supplier that will have the greatest influence on debt collection. The quality and the work of the service provider in charge of collecting payment only come next. The best provider can only do so much when the file is incomplete or poorly designed. The best insurance against unpaid debts is: prevention. There is no insurance in the world that can guarantee that your house will never be flooded .

To avoid damages linked to tidal waves and high water the best insurance is just to build your house outside an area liable to flooding.
The same applies to customer credit and debtor insolvency risks.
These last months are proof that credit insurance cannot be considered
as a palliative measure against business failures.
All too often, companies have neglected their share of work with regard
to customer risk management by relying on credit insurance policies
Using a professional collection agency will not provide better results
if the foundations of your debt are built on sand.
Here are some basic rules you should respect to considerably reduce
losses due to bad debt.

The unloved purchase order: it determines the whole process” and is just not fully appreciated.

If only it was signed, that would be a first step. If it included a company stamp, disputes relating to signatures would be avoided. The company stamp adds weight to the signature since the person using it is in principle liable to sign for the company.
If all the terms and conditions (price, terms of payment, delivery, changes) were stated, that would be a huge step ahead.
If a statement on the first page referred to the terms and conditions on the back, then all that would be missing would be the language of the country of destination and the required adjustment to local legislation to make the document perfect. Of course, the company must use the information transmitted appropriately :
for example, it must not deliver in July if the purchase order indicates Delivery must take place after August 15”

The delivery slip is a victim of modern shipping :
the key to avoiding disputes relating to delivery

A delivery slip that is signed and stamped is a considerable advantage. The shipping companies are not the supplier’s allies.
Prescription after one year: don’t hesitate to request copies of the delivery slips from the shipping companies whenever the payment period is extended; indeed, most shipping companies only keep these documents for one year. Signatures on electronic terminals: they are often illegible and of course it’s impossible to place a company stamp ; you must ask your business partner to indicate the name and the position of the person signing
the document. Some of these issues can be solved by clearly indicating in your terms and conditions the rules for processing claims. The best ”weapon” is still to obtain irrefutable
proof of delivery.

Indicate what you are selling !

Your sales person, certainly an asset for the payment of your invoices, but not in the traditional way.
You may be tempted to involve your sales person in a request for payment ; it is not his role.

However, he can be very useful when taking an order :
> By identifying the customer
> By specifying all the exceptions (discounts, waiver agreements, deadlines)
> By approving all the additional requests and orders.

Identify your customers

Invoicing the right customer seems evident, but it’s not; there are data verification sources for professionals (data bases) that must be used and above all, handle discrepancies.
It’s never good to correct unilaterally : For example: After checking with the data bases, you note that your sales person has transmitted customer contact information that’s partly wrong.
You must not change the data to replace it by information obtained in the database, but instead, you must contact the customer and obtain explanations for the discrepancies.
If the customer does not provide any explanation, it is better to cancel the order.
Some customers voluntarily give wrong information :
and when it’s time to pay, they claim not to have ordered anything.
A wrong address on the invoice, a significant difference in the company name, are insurmountable handicaps in case of legal proceedings.
When you open a customer account, always request a copy of the letterhead as well as a statement of bank details.
All the relevant information is there: Company name, legal status, share capital, VAT reference number, Trade and Company registration numbers, bank account number and bank address of the account.
They must be the same as those on the purchase order.
If there are any differences, a new purchase order must be established, using the accurate data.

Keep an eye on your customers !

Getting information is a good point,
but keeping watch is even better!

The information relates to your customer’s past profile.
The figures available in the data bases provide an indication but they never reflect your customer’s actual situation.
Only constant surveillance will let you keep one step ahead, and allow you to reduce your risk exposure.
Only a local professional can undertake surveillance.
All available information must be interpreted based on the specific local situation.
An anomaly should not entail ipso facto the cancellation of credit. However, searching for additional information becomes necessary.
You must not be held back by the cost of the research, because:
The sales cost of losing a customer is enormous.
Recording an irrecoverable debt costs a fortune in terms of margin.
To make the right decision, you need to have excellent information.

Act quickly

The recommended time to take action is at D (term) + 30!
Thirty days after the payment term, excuses, unjustified claims and promises must be considered as warning signs of much more important problems that put your outstanding debt at risk. You must act now! Each day that goes by as of the 31st day increases exponentially the risk of never recovering the outstanding debt.
It’s all the more true abroad. Different dunning systems and mentalities lead to additional delay, which is the real issue at stake.
Time is your outstanding debt’s greatest enemy, and there is no existing ”BOTOX” to limit its effect. Waiting 6 months after delivery to act is considered as considerably increasing difficulties and insolvency risk.
Waiting a year after delivery before taking steps is simply ”Mission Impossible”!

Let someone else take over before it’s too late!

Your know-how, your expertise and your abilities are universally recognized.

But handling outstanding, dunning, unpaid debt is a real trade, and it’s not yours.
There are a lot of advantages to letting someone else take over.
You put an end to blackmail ”if you annoy me, I won’t order any more”.
you gain a psychological advantage : the debtor receives a strong signal.
The collection professional has a ”technical” approach as opposed to a more emotional involvement:
you obtained the goods, the services, now you have to pay.
The debtor will have less difficulty in speaking to a third party about his problems: the same applies to a psychologist, marriage counsellor, and confessor.
Then there’s the cost issue: proper handling of your purchase order and your general terms and conditions means you can charge them to the debtor.

It can be dangerous to initiate actions which you don’t master !

You’re not improvising your trade, education and job training are required.

You can’t master everything.
Leave the customer management issues to professionals.

• handling an unpaid cheque
• legal proceedings
• serving formal notice, etc.

By wanting to handle things on your own, you can create more problems instead of finding solutions.
When you have a headache, you take aspirin.
When you break a leg, you go see a doctor.
Do the same with your receivables.
It’s not an issue if a regular customer pays a few days late.
A major customer who does not pay a first delivery, go immediately to a specialist.

Payment methods: when productivity and efficiency don’t mix

Sometimes the most technically obsolete tools are still the most efficient.
Take payment methods for example.
In France today, there are numerous inexpensive tools to manage payments :
• Recovered bill of exchange
• Sepa
• bank transfer
• direct debit
Excluding cheques, where you have processing issues, the surest way to
secure your outstanding debt is still the accepted paper bill of exchange.
The accepted bill of exchange (LCA):
sent with the invoice it enables you to send reminders before the payment
term and that gives you an advantage over others using different payment methods.
When signed, it is equivalent to an acknowledgement of debt.
It will enable you to speed up and secure legal proceedings.

Work on your terms and conditions of sale !

This is an indispensable item to secure transactions and due care should be brought to it.

When working abroad, these terms and conditions must be adapted to the law of the country in which the goods or services are sold.
It’s not sufficient to simply translate the original documents.
In France, due care must be brought to the following points :
• unpaid debt charges
• penalty clause
• jurisdiction clause
• reservation of title clause
• conditions for filing complaints
With these clauses, the collection improves in efficiency,
and it is possible to charge
collection costs to the debtor.
For these general terms of sale to be fully efficient, they must be printed on the back of the purchase order and  the following statement must be printed on the front of the document:
”the customer declares having read the general terms on sale printed on the back of the present purchase order and irrevocably accepts them”.

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