Bad debts are an inevitable consequence of modern day business.
In Venetian times we would have broken the customers trading bench (the advent of bankruptcy meaning broken bench). Nowadays we’d most likely get more satisfaction from hitting the ailing debtor over the head with it.
Most businesses have their processes in place to minimize the risk of non payment. Unfortunately systems and work practices may not work so well to compliment those processes. Even a firm credit policy may fail to provide sufficient protection from overdue debt, legal costs and bad debt. Sometimes emotions driven by the objective to maximize sales impede the application of even the best controls.
Cost effective credit insurance is just one way to limit loss. There are many ways to vary and minimize insurance premiums. Mercantile reporting agencies also provide a guide into customer distress risk, but with private companies dominating the Australian business landscape, gaining a true and current insight into customer credit risk remains a challenge.
I would be happy to share with you ideas on any of the above topics. There are also smart fundamental ways to minimize the cost of setting up new accounts, and then ensuring the customer relationship (and payment practice) is set in concrete from inception.