Cashflow management - getting to know your customers
All businesses, other than perhaps some retail businesses who sell a high volume of low value goods in a ‘cash on delivery’ environment, will no doubt be familiar with the challenges associated with getting paid in full, on time, all of the time. It is without doubt one of the hardest challenges in business.
In this series of blogs we will look at how getting things right with the management of the customer relationship can assist a business with managing its cash flow.
The most important initial step in managing the relationship with customers is to work out exactly who your customer is. It is very difficult to chase a debtor you know nothing about.
For all businesses who supply goods and/or services on credit, it is essential that as a minimum the following details are obtained for ALL customers:
the full name of the legal entity you are doing business with;
the type of entity you are doing business with;
Australian Business Number (ABN) and where a company is involved the Australian Company Number (ACN);
registered, trading and postal addresses;
phone and email contact details;
directors’ and/or the authorised officer’s names and contact details;
where feasible a name, signature and date of the person who completed the above details
Once obtained, these details need to be checked to ensure that they are correct. The websites of both ASIC and the Australian Business Register offer simple and free searches that can be used to verify a business’ details.
Don’t fall into the trap of taking new customers at their word or otherwise doing things “on the hop”. If you don’t know who it is that owes you money, then you are not going to get very far in trying to recover that money.
We specialise in providing clarity and confidence to business operators in their legal relationships – contact us today to discuss the legal needs of your business.Back