Know Your Customer
There are several steps you can take to become more cost effective in cash flow management. One of the easiest—and sometimes most overlooked—is to know your customer, and to update their information continually. Many customers who are behind on their account habitually make promises and guarantee dates and times for payment, but regularly fail to deliver on their promises and guarantees.
To help prevent what is commonly referred to as fraud by the customer, take the following steps to know your customer:
• Compare postmark dates on envelopes to the debtor’s oral representations about when the payment or correspondence was sent;
• Note fax numbers from which faxes are received, and identify the source;
• Note discrepancies between information contained in credit applications with information contained in credit reports;
• Check to see if purchase orders received from the customer are consistent with job descriptions and the nature of the customer’s business;
• Verify “ship to” addresses;
• Check credit references and verify information;
• If warranted, visit the debtor’s place of business or job site.
Every above action and precaution should be taken to ensure prompt collection and good cash flow management.