A Sale is not a sale ( yet) until it is paid..

 

Freeman Cebu Business

A sale is never a sale

C & C VIEWS - Ed F. Limtingco -

April 22, 2009 | 12:00am

 

In my over 18 years as an Executive of CIBI Information, Inc (CIBI), the leading credit information and receivables management company in the Philippines, I always believe that Credit and Collection, as a profession is one of the most underrated of all the professions in the industry. At times, I am getting to the point of being frustrated as I have been witness to a lot of companies who gave or still giving very minimal resources to their Credit and Collection Department.

A lot of times especially during my talks, I always ended up acting like a mediator (more of a referee) between the sales/marketing group and credit & collection/ finance department. At the end of all the discussions, I would always tell them that no matter what is the merit of the case, whatever is the situation and points being raised, they have to agree on this simple and most important principle: A SALE is NEVER A SALE until THE MONEY HAS BEEN COLLECTED.

Most companies especially those with big marketing or sales group, have a lot of incentives being given for hitting respective targets or quota. I always advise them that if ever there are incentives being given for a particular sale, it must be only released or given if that particular “sale” is already collected in full or if only half is collected, it follows that half of the incentive is also released. In this case the salesperson will have a mindset that anything that is still NOT PAID is not considered a SALE. Now, in this set-up, especially if there is a separate collection group that is tasked to collect, the salesperson will sometimes (if not always) put the blame of non-collecting to the credit and collection group. The sales group will raise a lot of issues such as “incompetence”, not enough effort, or the much classic line of “is it our fault if the credit and collection group cannot collect a legitimate contract/ transaction?” or to that effect.

This is the reason, why in all of my talks, I always push companies to have a simpler, clearer and well-discussed credit granting and collection policy coupled by escalation procedure. In drafting your Credit & Collection Policy, it is very important to start with the objective. For example, you could state as your objective: TO MAXIMIZE SALES, MINIMIZE COST AND LOSSES.

Of course, one must have in mind that there are a lot of factors to consider in drafting and designing credit and collection policies such as available resources, capital, competitors, product or services, target market or kind of customers, territory among others. Credit and Collection Policy acts like a map or a direction especially if you are already experiencing delinquencies in receivables or worse, you are already having an infighting between your sales/ marketing group and credit and collection department. As you know, delinquencies in receivables needs to be monitored because of the following reasons: delinquencies makes: (1) working capital tied up; (2) business operation disrupted and complicated; (3) company growth slowed down; (4) causes business failure; (5) the creditor financier for free; (6) the company requires to borrow more than necessary to finance receivable; (7) profits to be drained and/or reduced; and (8) lastly delinquency prevents build up of reserve for seasonal or long-term demands.

Bottom line, a sale is not considered a sale unless it is fully collected.

For credit & collection questions and inquiries, please call or text 0917-7220521 or email at elimtingco@cibi.net.ph

 Reposted from:

https://www.philstar.com/cebu-business/2009/04/22/459612/sale-never-sale

 

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It's not a sale, unless collected

 

C&C VIEWS - Ed F. Limtingco -

November 26, 2008 | 12:00am

 

A lot of times, I am witness to a lot of delinquency meetings wherein I always ended up acting like a mediator (more of a referee) between the sales/marketing group and credit & collection dept. I would always tell them that no matter what is the merit of the case, whatever is the situation and points being raised, they have to agree on this simple and most important principle: “A Sale Is Not A Sale, Unless Collected!

Most companies, especially those with big marketing or sales group, have a lot of incentives being given to the Sales/ marketing department for hitting their respective targets/ quota. I always advise these companies that if ever there are incentives being given for a particular sale, it must be only released or given if that particular “sale” is already collected in full or if only half is collected, it only follows that half of the incentive is also released. With this policy or in this case, the salesperson will have a mindset that anything that is still NOT PAID is not considered a SALE. Now, in this set-up, especially if there is a separate collection group that is tasked to collect, the salesperson will sometimes (if not always) put the blame of non-collecting to the credit and collection group. The sales group will raise a lot of issues such as “incompetence”, not enough effort, or the much classic line: “is it our fault if the credit and collection group cannot collect a legitimate contract/ transaction?” or this is the reason, why in all of my talks, I always push companies to have a simpler, clearer and well-discussed credit granting and collection policy coupled by escalation matrix. In drafting your Credit and Collection Policy, it is very important to start with the objective. For example, you could state as your objective: “To maximize sales, minimize cost and avoid losses”.

Of course, one must have in mind that there are a lot of factors to consider in drafting and designing credit and collection policies such as available resources, capital, competitors, product or services, target market or kind of customers, territory among others. Credit and Collection Policy acts like a map or a direction especially if you are already experiencing delinquencies in receivables or worse, you are already having an infighting between your sales/ marketing group and credit and collection department. As you know, delinquencies in receivables needs to be monitored because of the following reasons: delinquencies makes: (1) working capital tied up; (2) business operation disrupted and complicated; (3) company growth slowed down; (4) causes business failure; (5) the creditor financier for free; (6) the company requires to borrow more than necessary to finance receivable; (7) profits to be drained and/or reduced; and (8) lastly delinquency prevents build up of reserve for seasonal or long-term demands.

 Developing and implementing no-nonsense credit and collection policies and procedures must be based on the sound basic principles and guidelines of credit and collection management. Bottomline, it is to your advantage to develop a sound credit and collection policy. However, make sure that you have competent, experienced personnel to implement and enforce the said policies and procedures.

For credit & collection (C&C) questions, comments and rejoinders you want to share or inquire, you can reach him at 0917-7220521 or at elimtingco@cibi.net.ph

Reposted from : https://www.philstar.com/cebu-business/2008/11/26/418393/its-not-sale-unless-collected

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A sale is not a sale until it’s paid for

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trigroupadmin May 31, 2016No Comments

Cash flow is the lifeblood of any business. That’s why it’s absolutely crucial to collect debts due from customers for goods or services sold on credit. Indeed it has been estimated that late payment is a major factor in at least 1 in 5 business failures.

No matter how fantastic the product or service, no matter how great the business model, a business which doesn’t get paid for what it sells will never succeed.

Research conducted by the BACS electronic payments organisation last year found that an astonishing 76% of businesses are affected by late payment, some of up to 6 months beyond contractual terms. In those companies that suffered from late payment:

• 20% of directors were forced to take a pay cut
• 26% had to increase their use of bank overdrafts just
• 23% had no choice but to pay their own suppliers late, jeopardising continued supply

I recently attended a seminar conducted by our friends at Acquit Debt Recovery (www.acquit.org.uk). According to managing director, Diane Bantten, the most common excuses for non-payment that she hears are:

1. I can’t afford to pay (until my customer pays me)
2. The cheque’s in the post
3. I’m not paying because I have a dispute
4. I haven’t received the invoice
5. There’s no purchase order number on the invoice
6. There’s no-one here to sign the cheque
7. The director has died
8. We can’t pay you until we get paid
9. We’re changing banks
10. We’ve ceased trading/gone into administration/liquidation

Most of these seem to me to be pretty unimaginative, not say lame, excuses. A bottle of fizz to the reader who sends in the best or most outrageous excuse they’ve heard (in the opinion of our expert and completely impartial judge). The closing date is 28 June 2016.

Meanwhile, please don’t let late payers jeopardise the success of your business.

REPOSTED from:

 https://www.trigroup.org/sale-not-sale-paid/

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hi cici, how can we improve our collection efforts?

Improving collection efforts is essential for optimizing cash flow and maintaining financial stability. Here are some strategies that can help enhance your collection processes:

1. Clear Communication: Ensure clear communication with customers regarding payment terms, deadlines, and any outstanding balances. Send timely reminders and follow-up messages to encourage prompt payments.
2. Establish Payment Policies: Develop clear payment policies that outline terms, accepted payment methods, and consequences for late payments. Make sure customers are aware of these policies from the outset of the business relationship.
3. Automate Invoicing: Use invoicing software to automate the generation and delivery of invoices. Automated invoicing helps streamline the process, reduce errors, and expedite payments.
4. Offer Multiple Payment Options: Provide customers with convenient payment options, such as credit card payments, online transfers, or automated clearing house (ACH) transactions. Offering diverse payment methods can increase the likelihood of on-time payments.
5. Implement Collection Procedures: Establish standard operating procedures for handling overdue accounts, including escalation steps for contacting customers who are behind on payments. Consistent follow-up is key to effective collections.
6. Utilize Collection Agencies: If internal efforts fail to yield results, consider partnering with collection agencies to recover outstanding debts. Collection agencies specialize in debt recovery and can help motivate delinquent customers to settle their accounts.
7. Monitor Accounts Receivable Aging: Regularly review accounts receivable aging reports to track overdue payments and identify patterns of late payments. This monitoring helps you address issues promptly and take necessary actions to improve collections.
8. Train Staff: Provide training to staff members responsible for collections to ensure they have the skills and knowledge necessary to handle customer interactions professionally and effectively.
9. Reward Early Payments: Consider offering incentives, such as discounts or rewards, for customers who make early or on-time payments. Positive reinforcement can encourage timely payments and build customer loyalty.
10. Review and Optimize Processes: Regularly assess your collection procedures, solicit feedback from customers, and make adjustments as needed to enhance efficiency and effectiveness.

By implementing these strategies and maintaining a proactive approach to collections, you can improve your collection efforts, reduce delinquencies, and promote a healthy cash flow for your business. Tailoring these suggestions to fit your specific industry and customer base can further enhance the success of your collection initiatives.