The Confederation of Roofing Contractors offer members the benefit of having a company checked before they take on any large contract.
Businesses rely on clients to pay their bills, but as many CFOs know all too well, clients will frequently take their sweet time paying invoices as part of their cash-management strategy, because their working capital is taking a hit from their own late-paying clients, or because they are in dire financial straits. Whatever the reason, companies need to do what they can to limit their exposure to such credit risk.
Any finance department that has dealt with a pile of overdue invoices knows the frustration and potential damage late payers can bring. To avoid such problems in the future, business executives should revisit their process for extending credit and make sure employees are aware of the company’s policies. Otherwise, you will continue to experience delinquent payments and the risk of invoices that never get paid.
Why Are These Policies Important?
Companies that fail to implement B2B credit worthiness stipulations before taking on a new client will hurt their ability to pay their own bills. Rather than take that chance, company leaders should ensure the clients they are about to do business with have their finances in order and will be able to make their payments in a timely fashion. This guarantees your company’s own fiscal health won’t be put at risk if you partner with a firm that doesn’t pay what is owed.
To be sure, having strict credit requirements doesn’t merely ensure a company will be paid on time – it also limits their need for a lawsuit. Businesses that turn to litigation as a last resort when it comes to collecting what is owed face concerns, such as the time and money that will be spent on such matters, as well as the fear they may not actually be able to collect the full amount they’re owed, or even some of it. Indeed, if the likelihood of recovering past-due bills is only 50 percent, a company may waste valuable resources on a lawsuit and never even see the funds it set out to collect.
With the economy still uncertain, companies have to balance their need for acquiring new business and their need to get tough on risky customers. Not every client needs to be scrutinized – companies have to weigh the time and effort