Credit Management Health Check

These days, giving credit should be an informed decision. The effects of bad debt write-offs can be devastating for any type of business but particularly for SMEs and start-ups. Yet sensible credit granting can help expand sales enormously so it really pays to be sure your credit management system is fit for purpose!

Why not see how you rate with the CPA Credit Management Health Check tool

Do you have a credit control person or department with specific responsibility for assessing credit applications?

Yes

Do you credit check new customers to ensure they can meet their financial commitments?

Yes

Do you monitor existing customers for adverse changes that may affect their ability to pay their accounts?

Yes

Do you realise how expensive write-offs are and their effect on turnover?

Yes

Do you appreciate credit reports can be positive and assist your turnover?

Yes

Do you make a provision for bad debts in your accounts?

Yes

Do you recognise that if you give credit, then having no bad debts at all probably means you are missing out on business by being over cautious?

Yes

Do you adhere to a strict credit control procedure?

Yes

Are you sending invoices and statements out as soon as you can?

Yes

10.

Are your credit terms clearly shown on all paperwork including Quotations, Pricelists, Invoices and Statements?

Yes

11.

Do you know how much money is overdue at any one time?

Yes

12.

Is your internal credit control system cost effective and working well?

Yes

13.

Have you determined the amount of working capital required to finance credit sales?

Yes

14.

Do you know the average number of days it takes to collect one day’s credit sales?

Yes

15.

Do you regularly prepare and analyse credit management reports from your Sales Ledger?

Yes

16.

Do you regularly prepare and update cash flow forecasts?

Yes

17.

Do you have an action plan to deal with debtors in financial difficulties?

Yes

18.

Are you aware of Government legislation and initiatives designed to aid the collection of overdue accounts?

Yes

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