Payment terms: Are large customers calling the shots at your expense?
Expect your largest customers to request you to do a lot more for them in the upcoming months.
Many companies are reporting that their larger customers are increasingly dictating unfavorable terms — according to a survey by the National Association of Credit Management (NACM).
Next to the state/future of the economy and slow-paying/delinquent customers, unfavorable terms by larger customers was listed as the top concern by credit professionals.
Although credit pros have no control over the economy, you can keep larger customers with unreasonable demands from putting your company in an uncomfortable position.
While no one wants to lose their big accounts, there is a limit to how far your cash flow should be stretched.
One move to take: Determine in advance exactly how far your company is willing to bend when it comes to payment terms — that way you’ll be prepared with an answer if a large customer puts on the full-court press.
How does your A/R department handle customers who make unfavorable — or unreasonable — demands about payment terms? Share it with us in the Comments section.
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