Printing businesses lose enormous amounts of money each year due to customers either refusing or being unable to pay. The industry is indeed a problem area for bad debt, and one of many in which customers can walk in and be provided with a service without the proper checks.
The problem is further compounded by the fact that work is of no value if a customer doesn’t pay. It’s not reclaimed stock or equipment that can be resold to someone else.
By its very nature, printing jobs are often placed by businesses that have big plans but insufficient bank balances. It takes an optimist to go into business and it is optimists who tend to order fancy
brochures, catalogues or promotional material in the hope that the business will grow sufficiently to provide money to pay the bills.
So, how can a printer significantly improve its cash flow and reduce the loss from bad debts? A good start is by following some simple, basic housekeeping procedures. When a new customer is won, there is often a clash between the sales department who have brought in new business and the accounts department responsible for the company’s finances. Unfortunately, not all new clients are a cause for celebration and some may end up costing the business money. At this point, the accounts department must take control.
Before committing to a job, ensure that a new customer has completes a new customer form. In order to save you time in developing a suitable form, you can download a draft form from our website at www.prushka.com.au. This form can then be adapted to the needs of your business.
The form makes it clear exactly who your customer is, which is vital in any debt recovery activity. You need the precise name of the person, people or entity you are dealing with. If it is a company, you need the ACN. If it is a business name, you need the names of the proprietors, who will ultimately be liable for the account.
Home addresses should also be included on the form and it is very helpful to know whether or not the person responsible for the accounts owns or rents their home.
The form will also provide you with names of business references, together with the name of the client’s accountant and bank manager.
If it is a large order, it’s worth spending some extra time carrying out some basic business checks starting with following up references. If the business has been in existence for some time, find out the names of any previous printers and make some calls.
If your customer is a company, insist on obtaining a guarantee from the directors. This is standard practice. If they refuse to provide this, take great care.
Any customer that is reluctant to complete a new customer form should be treated with extreme caution. There should ideally be a rule, which is strictly adhered to, that says that no jobs beyond a certain dollar value will be undertaken without a completed new customer form being provided.
The form is an ideal place to incorporate your business trading terms and the following article will review the need for terms, while looking at some of the key points they should cover.
Roger Mendelson is a director of Prushka Fast Debt Recovery, principal of Mendelsons Lawyers and a published author. Prushka collect debts for over 45,000 business customers across Australia
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