Maintain a Good Credit Policy As the
company accountant, you often have the responsibility for
setting and maintaining credit policy. And as you know, the
sales department is wont to complicate your job because it
invariably wants to extend and expand credit to every
customer no matter what its financial condition. Often
you’re the only effective gatekeeper in this area. Steps you
can take:
Resist efforts to issue credit lines to new
customers without getting thorough credit checks.
When asking for bank references, be sure also
to ask for a breakdown of each of the customer’s accounts.
While large balances are reassuring, be sure that their bank
loans are being repaid.
When checking the applicant’s other business
references, be sensitive to the likelihood that only
“friendly” references were provided, which means you should
dig deeper and certainly not take all reports at face value.
Maintain an up-to-date credit file, recording
payment patterns. That way you can recognize a pattern
change that may signal problems ahead.
Even if payments are regular, check the credit
reporting services for each customer at least annually.
Again, that may provide you with a warning of an impending
problem.
Make it clear to the salespeople that it’s
their responsibility to keep you abreast of a customer’s
trouble signs such as layoffs or production cutbacks.
Draft policies on how quickly you need to take
affirmative action against a slow payer. Be aware that many
customers who typically experience large cash-flow swings
have developed very sophisticated ways to stretch payments
by cycling their on-time payments among various suppliers.
And obvious as it may seem, failure to send out
timely invoices can have a devastating impact on your cash
flow.
Praise Good Work The very best reason
to be generous with compliments and thank-yous is that it
will help you keep talented people when your money won’t.
Keep Bank Fees Under Control No one
has to tell you how expensive bank fees have become. And
while it’s prudent to develop strong, long-term relations
with a financial institution, no one says you must maintain
such a relationship even when the bank begins raising fees
or creating new ones. Things you can do to keep your bank on
its competitive toes and thus keep a lid on those fees:
Make sure its management is aware that you will
ask for competitive bids on your banking business every few
years. That sends two messages to your bank: You’re a
prudent manager who monitors expenses, and the bank had
better think twice before boosting fees or slipping in a new
fee category.
Question all fees. You may find you’re paying
for a service you neither use nor need. STANLEY
ZAROWIN, a former JofA senior editor, now is a
contributing editor to the magazine. His e-mail address is
zarowin@mindspring.com . An Invitation
The JofA publishes a monthly
collection of Golden Business Ideas and invites
readers to contribute their favorites (for
attribution, if you like). Send your ideas to
contributing editor Stanley Zarowin via e-mail at
zarowin@mindspring.com or regular mail at
the Journal of Accountancy , Harborside
Financial Center, 201 Plaza Three, Jersey City, NJ
07311-3881. | |