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The Better Payment Practice Group (BPPG) has urged businesses to spring clean
their credit management procedures, following a survey which found that one in
three do not confirm their credit terms in writing.
The poll, which was held on the BPPG’s website, asked businesses if they confirm
their credit terms in writing.
Of the 280 respondents, 32% admitted that they did not send their customers
written confirmation of credit terms.
The survey split respondents by number of staff and found that medium
businesses, with between 50 and 250 employees were least likely to confirm terms
in writing, with 43% not doing so.
In contrast, 80% of small businesses, with between 10 and 49 employees, and
large businesses, with over 250 employees, said that they sent written
confirmation of terms.
René de Sousa, BPPG representative for the Chartered Institute of Purchasing and
Supply, commented: “By not agreeing terms up front, businesses are putting their
cash flow at risk of abuse from late payers.
"The BPPG recommends that businesses send written confirmation of credit terms
to customers before they start trading with them, to avoid disputes further down
the line.
“As well as ensuring that customers know when to pay, agreeing terms of trade
credit at the outset provides an important opportunity to inform the purchaser
of any legal redress that may apply in the event of late payment, such as the
statutory right to claim interest and compensation for debt recovery costs under
the late payment legislation.
"Businesses of all sizes need to recognise that agreeing credit terms is as
important a part of the contract negotiation process as price, service and
delivery.”
Source:
Credit
Control Journal
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