Preventing bad debts
Not being able to pay the bills is a common killer. As we will discuss, it is possible to be making a profit and suffering a cash flow crisis at the same time. Accordingly, it is always important to try to bring in payments from customers as soon as possible after issuing invoices. For large credit sales, you may want to consult a credit agency before finalizing the sale, to see if the customer has a record of bad debts. You might also take an advance payment which covers a large part of your costs, so that you are risking mainly your profit. Offering discounts for early payment can be a strong incentive for clients to part with their cash, as discussed in Chapter 6. Charging interest on overdue accounts also helps bring ...
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