It never ceases to amaze me how many different types of people you run into in the business world. This is especially evident when it's bill paying and bill collecting time. Lately, we have had one of our biggest accounts decide that they did not want to pay their whole invoice for products we shipped in December. I suspect they have cash flow problems of their own, but we could have worked something out. Instead, they have dodged our calls, and when finally pushed, they came up with a magic formula showing how they only owed half of what was due us.
Since they represented a fairly big portion of our receivables, their problems became our problems in a hurry. We had to stretch out our payables. But we have made it a policy to be up-front with our vendors, take their calls or return them in a timely fashion. This goes a long way to building a better business relationship.
To date we have been fairly successful with collections, but sometimes we need more muscle. We recently became aware of the National Association of Credit Management, a 100-year-old organization whose purpose is "to assist the business community in protecting the most valuable asset of accounts receivable". It is a not-for-profit member-owned professional association whcih provides many services including business credit reports and commercial collections. The membership dues are $200 per year, and from what I can tell so far, it looks like a real bargain. We recently joined and will be using our new-found "muscle" to go after our above-mentioned friends. I'll let you know how it goes.
Our recent experience taught us that not all good accounts will stay that way. We made the mistake of extending too much credit and are now paying the price. We will be much more careful in the future, even with our established accounts. While we did not put all our eggs in one basket, we put enough of them to hurt ourselves when the basket broke.