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Tip of the week:  Avoiding bad debt – know your customer

Knowing your customer is the most important aspect of credit control.  You need to verify your customer’s true name and establish their ability to pay for the requested goods or services.

You can find out more about your customer by:

  • Asking them to prove their identity with photographic evidence such as a passport or driving licence or by requesting more than one means of non-photographic identification such as a bank statement and utility bill.
  • Request a trade reference from other existing suppliers to establish if they are prompt payers.
  • Complete a credit reference agency check on all new customers to determine their current status including their previous credit payment history.

Establishing this information for your customer will help you to make an informed decision about how you will work with them.  It will allow you to consider your options which may include you requesting a payment up front or allowing for goods to be invoiced.

If you are unsure of what information to ask for when signing up a new customer for a credit facility, we can help you with a customer credit application form, providing you with all the information you need to make an informed decision.

Posted: July 22nd, 2014

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