Entrepreneurs in Poland have not experienced easy time recently, and media reports about clear economic slowdown do not make them feel optimistic. In order to feel slightly more secure in the said ‘crisis’ reality, it is good to follow some rules, thanks to which we will keep on board safely. One must remember that despite many unfavourable external factors, the helm of our company is still in our hands.
Do not be afraid to check
Collect and analyse registration documents of new customers and update data of current partners, preferably on a yearly basis. Free of charge records are available on-line, e.g. capital companies record. You can find there information on changes in legal forms and related liability for the company, former and current shareholders of our customers and capital relations with other companies.
Screen the funds
Internet also offers free calculators, with the use of which we will be able to calculate basic indices reflecting the customer’s financial standing. Subsequent stages of negotiations with former customers should be conditional upon presentation of registration documents by the customer and our analysis, especially when we consider extension of the payment period or increase the trade credit limit. The basis is business intelligence.
Use non-standard contracts
Determine conditions of transaction performance precisely and unambiguously. The contract should provide for the following: subject of the contract, precisely described parties and their correct representation, technical specifications, conditions of acceptance or performance of service or product, completion date, settlement deadlines, possible deposits, advance payments, complaints and return procedures, deadlines and terms of payment. All these elements should also be contained in the corresponding order, especially if it is the first transaction and the cooperation with the new customer is not of repetitive nature.
Leave several options open
Pay attention to provisions preventing assignment of receivables. It will be required when acquiring such transaction-funding tools, like factoring and, if need arises, resale of possible debt to a debt-collection company. Ask your customer about forms of security. What source of funds will the customer use to repay obligations towards you if their basic source of fudning fails? The answer will show whether your partner takes responsible approach towards business and our cooperation.
Do not stake everything on one partner
Our main customer should not represent more than 20% of the overall balance of open receivables. An order which is too extensive, with insufficient operating and financial resources may cause a loss of financial liquidity of a company. Thus, signing a big contract will be profitable if we manage to perform it, and for this purpose you may need additional funds in the form of a credit, loan or factoring.
Published on: 14 November 2016