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HomeFarming News‘Do not rely on your overdraft facility to run your business’
Catherina Cunnane
Catherina Cunnane
Catherina Cunnane hails from a sixth-generation drystock and specialised pedigree suckler enterprise in Co. Mayo. She currently holds the positions of editor and general manager at That's Farming, having joined the firm during its start-up phase in 2015.
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‘Do not rely on your overdraft facility to run your business’

In this article, Sharon Farrell, founder of FACE Credit Consultancy, shares her expert financial tips for the agricultural industry.

Yesterday, we published an article from her, in which she outlines why the agri industry needs to overhaul the way it manages its credit facilities.

  • Unpaid or delayed invoices are a huge drain and cost on your business;
  • Do not rely on your overdraft facility to run your business. This is costing you money;
  • The current rate of interest for overdrafts is circa 8%. This is a drain on your resources and is eating into your profits.;
  • The usual 30 days can mean different things to different companies;
  • Is your 30 days from date of invoice? 30 days from month end, which is actually 60 days or 30 days from when the customer receipts the invoice?
  • Your credit terms should be in line with your business needs and should be determined by you and not dictated by your customer;
  • Analyse your risk of non-payment before offering credit to a new client;
  • Credit terms should be reviewed as the business grows or the economy changes;
  • Phone calls are the most effective way to collect on outstanding invoices. They are the fastest way to get queries resolved and really can help build stronger customer relationships.
Confident, calm and professional
  • Take the confident, calm, and professional approach;
  • At Face Credit, we have the FACE Training academy, where we train your staff to be effective credit professionals. I have developed this programme from my 25 year experience bringing the most practical and effective methods that will help get results for business.
  • Keep records of all correspondence relating to collections, these should be dated and as detailed as possible. This is a legal requirement should you need to pursue debt legally;
  • Negotiation is a key skill for all credit professionals, and should be used daily to ensure;
  • Ensure you have a robust contract that has all your terms of sales. This should also include your dispute and returns policy.
Returns policy, detail behind numbers and collection targets 
  • Make sure you have the correct legal entity the company trades under and include this in all correspondence, most importantly in invoices and statements and any letters;
  • Returns policy: Be clear about this, as this could be used as a delay tactic by some.
  • Be mindful that during a growth period of a business, the need for cash flow is higher. Credit terms may need to be renegotiated;
  • It is not enough to know how much you have outstanding. It is vital that you know the detail behind those numbers. Who owes you money, and what is their ability to pay you back?
  • Set collection targets – again, these should be in line with credit terms and your business needs.
Strong relationships, documenting conversations and good money people
  • The companies that do credit well are the ones that have a strong relationship between the sales team and the credit team. There is nothing worse than a salesperson trying to sell to a customer that is on hold for late payment. Communication is key. Collecting money is in everyone’s interest so all information relation to credit should be shared throughout the business;
  • As a professional credit management company, we go in as one point of contact, and this is crucial as it ensures continuity and clarity;
  • If you must resort to a legal solution, besides having proof of contract and proof of sale, it is also important to make sure that you have as much written correspondence as possible This is why we advise you to document every collection conversation.
  • Remember is up to you to prove that the debt is owed; not up to the debtor to prove that is not! I have seen cases thrown out of court because they could not prove they had made a concerted effort to collect the outstanding invoices;
  • If you have a good money person in your company, you will never want to lose them. A good credit person should have the mind of an accountant and the personality of a salesperson.
About Farrell:

Farrell runs a credit management company based in Naas, who works across the SME sector, of which the agri industry is an important employer providing work to over 170,000 people,

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