How to protect your receivables already in the market?

In tough market situations, it is very important to protect the money to be received from your customers.

1. Do take credit insurance to protect your money through insurance

2. Offer discounts equal to Bank interests and collect payments in advance

3. Be the first one to collect money when it is ready. Many times, ready payments also not collected on time

4. Send monthly statements and get confirmation from the client with stamp and signature. Also send quarterly, half-yearly and Yearly statements to get confirmation

5. Deliver Products and goods in Good order, so that payment is not an issue to process the payments. Many payments are struck due to disagreements between the client and supplier as it is not done up to client satisfaction

6. Always have proof of delivery to protect your payment, have a system to protect these documents

7. Gauge your risks in dealing with your customers, use instincts, Gut feeling, and cross with market conditions to take decisions at right time. Our prime motive is not to lose out our capital, if we don’t earn a profit is also okay.

8. Do a credit check of the customers before you start dealing with

9. Do cash business as far as possible

10. Keep track of all your Ageing reports and set of actions ready in hand while following up on payments. Get your team trained on that

11. Know the law of land and keep lawyers and debt collectors handy to collect your money

12. Issue warning letter and start charging interests after the credit period

13. Secure customer information like ID, Passport, Address, etc.

14. Do not diversify or disinvest more than 20% from receivable to another projects/Expansion/Diversification. Always seek strategist or financial consultants help

15. If you are using Bank’s facility, keep Bank informed about the delay in payments and ask for a credit cycle extension if required

16. Do not all eggs in one basket. Not more than 15% of overall turnover can be sold to one customer. Have a diversified customer base.

17. Be ruthless in money matters, do not show mercy to anyone.

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