Tips For Objective Success in Your Business Operations
Selling is the main objective of companies, but they always have to do it, taking into account the profit margin and the risk. Delays in collecting credit sales increase the financial risk due to the loss of liquidity.
Companies must carefully measure who and how much they sell on credit since assuming too much risk in commercial operations can be very damaging. The most advisable thing to do before selling on credit is to take precautions to avoid the dreaded defaults and delays in collection.
What does a company have to take into account before selling on credit?
Table of Contents
Balancing Payments With Receipts:
The payment term that we grant to our clients must be aligned with the collection term that our suppliers offer us; if we pay in 30 days but charge in 60, it is possible that we have a serious imbalance in the cash flow. There are very interesting solutions to balance the Cash Flow of a company—the advance payment of invoices or Factoring and Confirming.
Factoring allows companies to collect their sales immediately. To collect, companies only have to invoice. Converting credit sales into cash collection is possible through Factoring. Confirming helps companies easily manage payments to their suppliers without suffering treasury tensions.
Through this service, your suppliers charge immediately without adding CIRBE and with security in the collection.
Companies can secure their business transactions with Non-Recourse Factoring. With Gedesco’s non-recourse Factoring and being able to collect sales in advance, companies do not add CIRBE, know the cost of the advance in just two clicks through the Invoice Market platform, and obtain coverage against unpaid bills.
Thanks to this type of Factoring, companies will not run risks in their commercial transactions since it is the Factoring company that assumes the risk of insolvency of debtors. Small business owners face all kinds of risks from natural disasters to equipment failure. Business owners insurance is the best option for all business owners.
SMEs are seeing reduced coverage of traditional credit insurance for their commercial operations due to the foreseeable increase in insolvencies.
Through Non-Recourse Factoring, companies will not have to assume the risk of insolvency of their clients, so it is a good option to obtain liquidity immediately and secure their commercial transactions. Know well who you sell to. Knowing the client, you will work for is very important, even more so if the agreed sales method is on credit.
Measuring the risk of non-payment or solvency is a key element when selling on credit to a customer. With the risk reports prepared by Infocif, you will be able to know the probability of non-payment and establish a pricing policy adjusted to the client’s risk.
In addition, these reports have an added value, and that is that they are the only ones that offer a financing commitment.
Charge In Advance:
Collecting sales in advance allows you to eliminate the risk of non-payment 100%, but working exclusively with payment in advance is very difficult. Requiring this form of payment will greatly limit your client portfolio.
Active Collection Management:
If we receive unpaid bills despite taking measures, we must resort to a company specialized in managing them as soon as possible.
In Recobrarte, they are experts in the recovery of unpaid debts, they have recovery ratios of over 87%, and they are also the only ones who do not charge anything if the company does not manage to recover their debt, nor attorney fees, nor lawyers, nor court fees. , any.
The debtor must pay before 60 days after the receipt of the goods or provision of services; by Law, may not extend this term. According to this Law, the term for the Administration is reduced to 30 days. In both cases, these deadlines are widely exceeded by the Administration and private companies. When can the creditor demand default interest? The delay occurs automatically when the client does not pay within the agreed term.
The creditor can demand default interest if he has fulfilled all his contractual obligations and has not received payment on time. In addition to late payment interest, the creditor will charge collection management fees.
Delinquency, both private and public, is one of the great problems that SMEs and the self-employed must face. If the problem worsens, a liquidity gap is generated that can lead to bankruptcy if it lasts too long. of the company. Companies must take measures to avoid these extreme situations.