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Offering credit and managing risk

When someone offers you goods on credit, you’ll probably agree. That’s why many credit card companies offer their unsolicited cards by mail. They know giving you the card will drive you to spend. That way, they can make money via interest charges. Many people who receive unplanned credit will use it up without thinking about repayment. And once the unexpectedly high bill arrives, they have to spread their repayments, accruing interest, and allowing the card company to recoup profits.

From a business perspective waiting for late payments affects your cash flow, among other things.

 

Why (not) credit?

If your outstanding payments are large enough and numerous enough, they affect the ability of your business to run. You can’t buy supplies, pay wages, or keep up with your own creditors. Debt can also lower your margins – you should consider hiring a collection agency in Sydney to recover the debts faster, or you run the risk of wasting time and money. Plus, the passage of time lowers the value of money, so whatever cash you recoup, its purchasing power will be lower, and the power of your profits will dip as a result.

After all, $5 in January can do a lot less than the same $5 in December. So, think carefully before you choose to provide goods and services on credit. Once the decision is made, don’t offer credit as a given. Run thorough credit checks to be sure they’re good for it. You need the client’s permission to pull their credit because every check dings their creditworthiness. If your potential debtor is an individual client, they need to sign your T&Cs, give you current contact details, and certified proof of ID.

 

Corporate credit checks

Businesses that want credit from you should provide more details – include three referees that can vouch for their credit status, a comprehensive list of their directors /owners/partners, and a legally vetted indemnity guarantee (which your own lawyer needs to review). All this is before you agree to the credit terms. Your customers will review the amount, interest rates, penalties, and due dates. Their signature says these terms are agreeable to them, but it’s not a guarantee that you’ll ‘lend’ them the cash/goods.

After you’ve done your credit check, then you should immediately notify the customer and deliver the goods/services. Make sure both you and they are clear about when they need to pay, and how much. Keep precise records every step of the way, both for tax reasons, and in the event, you’ll have to follow them up for (late) payments. Boston Commercial Services are available to help at any step, from sending payment reminders to legal debt pursuit, and cash flow is more manageable if you approach credit with caution from the get-go.

 

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  • I have known the principal of the BOSTON Group (Derryn HARRISON) as well as key staff members (including Ben GOWER) for well over 2 decades and have been using their professional services for myself as well as for Powerhouse Logistics Pty. Ltd. on a regular basis, not only in Sydney but on a national basis.

    At all times BOSTON have been extremely pro-active, attentive, courteous and professional with all matters we threw at them. Their advice has always been extremely sound and commercial and I find them to be a "breath of fresh air" within the legal fraternity and have no hesitation whatsoever to highly recommend them.

    Peter Brueckner

    Powerhouse Logistics Pty Ltd (CEO)

  • Expect A Star has worked with The Boston Group for 10 years. In this time we have appreciated the ongoing support of Boston for all of our collection and legal requirements. Like most businesses cashflow is critical to ongoing success and growth, with Boston we have found a partner who are an extension of our business and play a key part in our cashflow management. The Boston Group bring a level of expertise to our business which is valuable and coupled with their excellent customer service we look forward to continuing to work with them for many years to come.

    Ryan Meldrum

    Former CEO

  • I have been using the services of The Boston Group and their legal entity for over 11 years. During this time I have found their service to be impeccable, delivered with the utmost professionalism and integrity. The vast majority of cases that I have placed with Boston were far from straightforward, requiring legal acumen and delicate handling. Having used all methods available without success to procure payment, I confidently placed these matters into their safe hands. In all instances a successful outcome was achieved.

    Mark Parish

    Credit Manager

  • SNP Security has had the pleasure of working with Boston Commercial Services for the past 11 years. Boston has played an integral part in the continuing success of SNP Security’s low DSO’s, 90 Day % Debt & of course Bad Debts Written Off.

    Amanda Griffiths

    National Administration Manager

Boston Commercial Services prides itself in offering specialised, professional services, through a highly experienced team of debt collector, with personalised client attention.