Bad debts and late payments are the cause of one in four business failures and are responsible for the financial difficulties of countless others.
It is therefore necessary to secure its receivables either by demonstrating the financial and behavioral quality of its buyers and / or by providing security solutions.
These can either be obtained through commercial negotiation (for example by obtaining a deposit or a bank guarantee) or from third parties.
The final payment of your invoices is often determined by what has been approved during the trade negotiations.
Good management of trade receivables usually requires anticipation and resolution of potential problems even before delivery and invoicing.
The first step is to define what outstanding amount is acceptable for a given customer and to optimize the payment conditions:
There are one or more solutions for each objective and for each business relationship.
Each client is special. It is therefore interesting to use a wide range of tools to secure your receivables and do business in all quietness, whoever is your client.
These solutions can be divided into two categories.
Choose wisely the way to secure your receivables. Each relationship is special, and every credit difficulty has a solution. This will be determined by the level of risk of unpaid invoices and the context of your business relationship.
Thus, a bank guarantee will be the best solution in some cases when payment in advance or a delegation of payment will be the best solution in others. It is, of course, possible to combine different tools to reduce the risk. For example, getting a 30% down payment associated with a guarantee from a credit insurer and contractual conditions protecting your business until all invoices are paid in full.
It is therefore necessary to secure its receivables either by demonstrating the financial and behavioral quality of its buyers and / or by providing security solutions.
These can either be obtained through commercial negotiation (for example by obtaining a deposit or a bank guarantee) or from third parties.
When securing sales?
After evaluating the creditworthiness of your customer, you first need to set up the credit limit and the payment terms in order to ensure that the credit and payment conditions allowed to your customer are consistent with their financial capacities.The final payment of your invoices is often determined by what has been approved during the trade negotiations.
Good management of trade receivables usually requires anticipation and resolution of potential problems even before delivery and invoicing.
What are the steps to secure the business?
There are many different types of means to ensure the subsequent payment of receivables.The first step is to define what outstanding amount is acceptable for a given customer and to optimize the payment conditions:
- Set a credit limit in line with the financial capacity of your client,
- Define the payment term (down payments, payment delays) to achieve your sales without exceeding the credit limit.
- Establish guarantees (from banks, credit insurance, etc) and / or contractual clauses that reduce or cancel the consequences for your company of an unpaid invoice.
Secured receivables are linked to several objectives:
- Help establish business relationships with customers of poor creditworthiness without exposing your company to the risk of unpaid,
- Secure all your receivables accounts in order to avoid any unpleasant surprise.
- Avoid late payments,
- Discount your accounts receivable in order to get cash as soon as invoices are issued.
There are one or more solutions for each objective and for each business relationship. Each client is special. It is therefore interesting to use a wide range of tools to secure your receivables and do business in all quietness, whoever is your client.
- The specific ones are those that you develop for a client or a particular business.
- Generalist ones: those involving some or all of your clients.
Choose wisely the way to secure your receivables. Each relationship is special, and every credit difficulty has a solution. This will be determined by the level of risk of unpaid invoices and the context of your business relationship.
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