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Alan Greenspan, the former chairman of the U.S. Federal Reserve, says the likelihood of a recession is 50 percent. Creditors will need to be much more organized when extending credit.
Regardless of how companies have staffed their accounts receivable department in the past, now may be the time to re-evaluate some of your strategies and procedures regarding extending credit and collecting on the accounts receivable.
It is a definite benefit that any credit manager optimizes the flow of cash and the collection process they have instituted. And in any recession you will find that the accounts receivable process will become a priority for all creditors from services providers to medical providers.
With consumer debt be sure to continuously update information such as addresses, place of employment, spouse information, etc. With commercial debt always get your contracts signed by your customer. Don’t forget your personal guarantees when dealing with corporate clients.
Another consideration may be obtaining credit reports and reporting delinquent accounts to a credit bureau. The three credit bureaus are: Experian, Transunion and Equifax. You can visit their websites and decide if this would be a good option for your business. Pulling credit reports will be a definite advantage to deciding who to extend credit to and who to avoid. Additionally, reporting unpaid accounts to a credit reporting bureau will encourage your clients to pay on time thus avoiding a negative report which will lower their credit score. If you find reporting to the bureaus to expensive, consider placing the unpaid accounts with a collection agency that reports for you.
Every aspect of your company should be reviewed, but keep in mind your accounts receivable can often lead to your bottom line.
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