Wie legen Sie optimale Kreditkonditionen für Ihre Kunden fest?

Setting optimal credit terms involves assessing the customer's creditworthiness, industry standards, and your own financial needs. Consider factors like payment history, financial statements, and market conditions to determine suitable terms that balance risk and customer satisfaction.

Before determining our company's Key Performance Indicator (KPI) for Accounts Receivable Turnover (ART), it is imperative to establish precise credit facilities for our customers. This necessitates diligent follow-up with customers or sales personnel, utilizing Customer Relationship Management (CRM) data, Credit Agency Reports, and market intelligence specific to the relevant industry or company.

ART, or Accounts Receivable Turnover, is a crucial metric for cash management because it reflects how efficiently a business collects payments from its customers. Here's how ART impacts your cash flow: High ART means faster collections, freeing up cash for bills, reducing borrowing needs, and fueling growth. Conversely, a low ART indicates slow collections, limiting cash flow, increasing bad debt risk, and hindering growth. High ART = good! More cash for bills & growth. Low ART = oh no! Less cash & risk of bad debt. Therefore, monitoring and improving ART is essential for effective cash management. By analyzing your ART, you can identify areas for improvement in your credit policies, collections process, or customer payment terms.

Assessing Creditworthiness: Evaluate the creditworthiness of your customers by reviewing their credit history, financial statements, and references.Establishing Credit Limits: Determine the maximum amount of credit you're willing to extend to each customer based on their creditworthiness and your risk tolerance.Defining Payment Terms: Clearly outline the payment terms, including the due date, grace period (if any), and any penalties for late payments. Common payment terms include "Net 30" (payment due within 30 days), "Net 60," or "Net 90."Communicating Terms: Communicate the credit terms to your customers in writing, such as in a contract, sales agreement, or invoice.Monitoring and Reviewing: Regularly monitor your customer's payment.

High ART is integral part of effective cash management . Cash is king as we know so collecting money timely not only improves company’s financial position but also ensure cash is readily available for working capital

At present, there appears to be a lack of optimal credit terms or facilities that adequately cater to the needs of both customers and suppliers. Our immediate priority should be to establish credit facilities that align with industry standards, cash flow considerations, and the specific requirements of our customer base. Subsequently, regular reviews and revisions should be conducted annually to ensure ongoing alignment with customer needs. Moreover, in instances where customers exhibit delayed payments or unfavorable credit report outcomes, it is imperative that we undertake necessary actions to mitigate our credit risk exposure.

Setting optimal credit term for customer involve balancing the need to attract and retain customer with the need to manage financial risk and maintain cash flow. Following Some step help us to set optimal credit terms. Understand your customer credit worthiness Asses industry Standard Evaluate your cash flow needs Define credit term clearly payment period Late payment penalties Set credit limit Review and monitor regularly Build relationships And many other.....

For me, A/R is about problem solving. Make sure the invoices meet the client's requirements and be knowledgeable about various invoicing platforms. Make friends along the way!

Cash management is crucial for the financial stability of a company. Maintaining a proactive approach, like timely invoice submissions and effective follow-ups on pre and post due invoices, can help ensure a healthy cash flow. Building strong client relationships is also essential for consistent cash collections. Good financial management is a key to business success.

Collecting an overdue invoices is one of the many struggles of credit & collections department facing everyday. While seeing your ageing all in above 90 days, the red flag must pop up in collecting those past dues and the chasing one customers to another is like a Tom & Jerry thing. One of the many ways in pursuing the collection is to follow up as many follow up as you can. Try to have a client visit and negotiate to them any possible discounts you can provide inorder to collect those overdues. Make a good customer connections for smooth access in calling them. And make sure to provide a credit limit in all of your customers and once the bar is raising red flag, I believe you have to take action immediately and prompt that customer.

In my humble and short experience with AR, I can say that both automation and customization create a bulletproof AR system. It is much more likely for customers who are guided and being accommodated throughout the payment period to become customers for life. It’s simply understanding how their own finances work and tailoring a more achievable payment plans that fits their specific situation. Like changing their due dates and structure their payments based on high and low sales seasons.

In my experience, prevention is better than cure when it comes to overdue invoices. Timely, accurate invoicing & regular, friendly follow ups can help get your invoices prioritised & prevent late payment. Nevertheless, it’s essential to have an escalation process to cover eventualities where a customer can’t or won’t pay (& it’s important to try & establish the difference). In most instances, you should aim to work with the customer to identify & overcome barriers to payment. Other customers may need to be incentivised to prioritise your payment over others. In the UK, the Late Payment of Commercial Debts Act entitles businesses to charge interest on all overdue invoices & this is often sufficient leverage to get overdue invoices paid.

Handling a Receivable account is quite a challenging job. Certain process we need to take account into like sending monthly SOA, on time invoice delivery, constant follow up and of course making good connections with customers. Most of the times, to have good connections with customers help us loosen that challenges of not getting paid it's because when you know your customer, most likely they will consider to pay you on priority list. That's based on experience!

Implementing some or all of the receivable best practices in n accounts is beneficial for businesses of all sizes. By establishing credit policies, simplifying payments, and regularly monitoring past due accounts, your organization can reduce late payments and improve cash flow. Tracking KPIs and adjusting strategies accordingly will help improve receivable management while providing your business with a strong financial base. A strong recoverable process will result in stable cash flow and increase your organization's ability to make informed financial decisions for growth and success.

Credit terms are simply the time limits you set for your customers' promise to pay for their merchandise or services received. But for many small business owners, establishing credit terms can be cumbersome. When customers purchase your merchandise or services, you expect them to pay within a specific period of time (generally, 30 days). As a result of this promise, you agree to give up an immediate cash inflow until a later date. The credit terms of most businesses are either 30, 60, or 90 days. However, some businesses may have credit terms as short as 7 or 10 days. Often a business's credit terms are dictated by an industry standard, or by its competition.

As a collection expert, I identify reasons for late payments and offer solutions. For early settlements, I provide flexible options like lump-sum payments, waiving penalties, and restructuring principal amounts. This approach helps customers settle loans efficiently, improving collection rates and reducing delinquencies.

To set optimal credit terms, understand industry standards and what competitors offer. Common terms might be 30, 60, or 90 days, depending on the sector. Align your terms with industry practices while considering your cash flow cycle to avoid cash shortages. Next, assess the **creditworthiness** of your customers. Use credit checks to evaluate new customers and review the payment history of existing ones. For high-risk customers, shorten payment terms or ask for partial upfront payments to mitigate risks. Finally, evaluate your financial position and cash flow needs. Ensure your terms won’t strain your working capital or delay payments from critical expenses. Finding a balance between competitive terms and financial health is key.