PO Financing- the ideal financing tool for the right situation

By Mike Semanco, President, Hennessey Capital

For many entrepreneurs, landing that large purchase order is just what the doctor ordered.  You worked hard to win the client, outlasted the competition and are in a position to build on your success.   The team celebrates until someone asks, “Do we have the cash to purchase the large amount of supplies needed to deliver the project?” 

Growth can be a major drain on a company’s cash and a major reason why we stress the importance of cash forecasting. 

Although purchase orders are covered in the Uniform Commercial Code as an asset of a business, it is not an asset that is easily financed, unlike accounts receivable, inventory, equipment or real estate.

Purchase order financing is offered by very few finance companies and is usually best suited for distributors.  Manufacturers and service providers are not ideal candidates for PO financing due to the concern of performance risk.  PO Financing for distributors allows for the securing of goods by way of letter of credit (promise to pay once certain stipulations are met), so that the distributor can increase its buying power with suppliers.   In the case of a distributor, they are not responsible for manufacturing the product so performance risk lies with the supplier.  PO financing will be structured so that the supplier will not receive payment unless they produce the proper product as defined in the PO, which eliminates the issue of performance risk and thus satisfies the PO funding source.

PO financing carries more risk to a lender than traditional A/R financing thus the cost is more than traditional A/R financing.  Due to the increased cost, companies must make sure they have sufficient margin in the order.  PO financing is typically used in conjunction with an A/R line of credit or factoring facility so that once the product is received by the end user, invoices can be financed and the cash can be used to repay the PO funding source.  This opens up the PO finance facility to be used for new orders. 

Purchase order financing is not ideal for every business but in the case of a distribution model where product needs to be purchased and sold to large entities or retailers, it could be a great tool to secure the cash needed for new growth.

Communicating Effectively with Stakeholders

By Toby Dahm, Senior Vice President, Hennessey Capital

What word comes to mind when you hear the name Roger Penske?  For most people, that word is success.  Roger Penske’s pathway to success began as a part time race car driver.  He used his success on the race circuit to take a vigorous dive into the business side of auto racing, where he has remained on top for three decades.  Not entirely satisfied by his triumphs on the race track, Roger expanded his universe and built one of the world’s leading transportation empires. 

Penske was always part of a team.  Whether racing, managing a race team, building a global empire, or orchestrating Super Bowl XL, he was a master of building and leading productive teams.  Perhaps the most vivid illustration of his leadership ability was when he chaired the Detroit Super Bowl XL host committee.  Penske assembled a 41-member committee that identified problem areas, raised donations, met with NFL officials and garnered volunteer support for the event.  The transformation that took place in Detroit, which presented itself as a world class city was amazing.  About Penske, Bill Ford, Chairman of Ford Motor Company said “He is the most impressive businessman in the city.  Everything he touches works because of his personal drive and because his attention to detail is so exquisite.  I just love being around that guy.”

What is it about Roger Penske and other leaders that allows them to possess what seems like a golden touch?  It is the ability to communicate effectively with all stakeholders.  No person is an island.  No matter how much drive and talent an individual has, if they cannot build an effective team and coordinate the effort of their team with suppliers, customers, fans, officials, volunteers, and whatever stakeholders are mission critical, they will fall short of realizing their potential.

A two year study by Deloitte in 2001 confirmed that effective communication is a key factor in business success, which comes as no surprise.  While this appears to be common sense, great execution is much less common.  We must remind ourselves that while the concept of communication appears simple, we cannot lose sight of its importance.  Here are four tips that will help you communicate with the stakeholders of your business:

1. Be proactive.  As a leader, you not only need to cast and communicate your vision, you also need to be out in front of (or at least on top of) important issues and developments.  The sooner you address these, the more influence you will have and less damage will be done by the infamous rumor mill.
2. Be genuine.  Show concern and empathy for each stakeholder’s position.  Knowing your audience and listening to their concerns is what will lead to success here.
3. Use simple language.  Speak or write the way you normally talk, and avoid acronyms and jargon, which only serves to alienate others and develop cliques.  Great leaders are just as easily understood by line worker bees as they are by their board of directors.
4.  Be positive in your approach.  Recognize that there is an element of negotiation in most communication, so look for a win/win outcome.  Think from the point of view of your audience.  What’s in it for them?  Roger Penske was masterful in getting thousands of volunteers to see the success of the Super Bowl as a personal success for them.

While Roger Penske is immensely talented, passionate, and determined, he would not have achieved the success he has without being a great communicator, which enabled him to get thousands of people to embrace and achieve his vision.

Equipment Leasing - Does it make sense for your business?

By Jeff Wright, Senior Vice President, Hennessey Capital

 

Many businesses are faced with the decision of whether to buy or lease equipment. Each decision must be made on an individual basis. In each situation, the needs of the business and purpose are two important considerations. Is it revenue-producing equipment or can it offer cost savings and efficiencies?

A number of other factors also should be considered before making the decision. One consideration is the predicted lifespan of the equipment. Will the asset be useful for a long period of time or will it be obsolete in the next few years? Leasing may be more advantageous if the asset has a short lifespan while purchasing may be preferable if the productive life of the equipment is longer. For example, computers are an asset where technology advancements render them obsolete after a few years. Leasing may be the preferable option. Service and repair costs should also be considered.

You business’s current cash position must be taken into account as well. Leasing generally does not require a large capital investment or deposit up front. Monthly payments may also differ allowing the business to conserve cash. The related concept here is the opportunity costs. Can the cash saved by leasing be invested in other areas of the business to growth the company?  Therefore, leasing may offer more flexibility and fewer constraints to growth because it requires less upfront cash.

When exploring the benefits and challenges of leasing, entrepreneurs should also examine how the asset is accounted for. When you lease equipment, you do not own the asset and it is not recorded as an asset on the company balance sheet. Payments are recorded as an expense and reduce your profit. The equipment will have some value at the end of the lease. Its estimated value is called the residual value and is generally a percentage of the purchase price. Most leases allow you the option to purchase the equipment for the residual value at the end of the lease. When purchasing, you own the equipment and the asset and related loan, if you borrowed the funds to purchase, are recorded on the balance sheet. The interest cost and depreciation are expensed and impact the profit and loss statement. The interest cost between the two options and method of depreciation should be part of your analysis. 

Be sure to review the lease agreement and consider any cost you may be charged at the conclusion of the lease. Factor in charges for damage or overuse. Are there requirements for providing timely notice for the termination of the lease or penalties for not returning the equipment on time?

The helpful tool for determining whether to lease or purchase an asset is to calculate the net present value. It uses the discounted cash flow, accounts for the time value of money, tax implications, depreciation, and timing of cash flows. The alternative with the lower net present value cost is the most economical. Your CPA can help you with this analysis.

 

Is ABL The Answer?

By Toby Dahm, Senior Vice President  

 

In 2009, when most forms of lending were greatly reduced, loan commitments by asset based lenders actually increased, putting a very mild dent in the credit crisis.  Why were asset based lenders willing to extend more loans when the rest of the lending community was hunkering down?  It has to do the focus of the industry.

 

Asset based lenders base their credit decision largely on the value of the assets (or collateral) that they are lending against, as well as the business outlook of their borrower.  These are different criteria than tradition lending, which emphasizes financial strength, liquidity and historical profitability.  It is this focus on the present and the near future that enabled asset based lenders to select viable candidates to back despite the deep recession and the adverse financial impact it had on most borrowers.

 

To many businesses, the choice to use asset based lending was made for them due to no other options being available.  Other companies, which had options ranging from issuing bonds to selling equity, chose an asset based loan due to advantages it provided.  The main advantage is that it provides borrowing availability at precisely the time it is needed the most.  As the level of assets grow when orders are received and fulfilled, asset based lending provides for real time advances against the growing asset base, thus minimizing the drain on cash flow caused by growth. 

Another advantage is the close working relationship between the asset based lender and the borrower.  The asset based lender is in very close communication with the borrower.  In turbulent and dynamic times, and asset based lender is at an advantage in responding to client needs that often arise suddenly, due to this close working relationship.

 

Asset based lending agreements are covenant light.  The documents contain many fewer financial and operational covenants that can trip up a borrower or limit their flexibility.

 

Lastly, asset based lending establishes a borrowing discipline that requires the borrower to utilize the loan properly.  It is a tool to fund growth and seize opportunities, however it forces borrowers to cut borrowing levels during times of decline.  Although this forced discipline is not fully appreciated at the time, the borrower will ultimately come to understand the advantage of having lower debt during lean economic times.  As we have seen played out recently in many painful bankruptcies and restructurings, carrying excessive debt loads is a huge competitive disadvantage.

 

These and other benefits of this form of lending are the reason that so many companies are looking at this style of lending as being the best fit to meet their borrowing needs.

Working with trusted advisors to achieve your business goals

By Joe Romeo, Senior Business Development, Hennessey Capital
 
Who are trusted advisors?  Trusted advisors include your banker, accountant, CPA , attorney, business coach, mentor, academic scholars and other experts in your particular field of interest

A trusted professional is someone you can rely on to give you straight answers and tell you what you need to hear rather than what you want to hear. Integral to the trusted advisor relationship is someone who places your interests first above all others and who will be there when you need them.  Trusted advisors are committed to your long term goals and successes and will have a deep understanding of those aspirations.  They exercise sound business judgment and will protect your assets and interests as if they were their own.           
                               
A trusted advisor is typically an  expert in his or her field and is able to offer solid advice and direction along with objective assessments and valuable input.
               
Advisors are an important part of managing your business because often we don’t know what we don’t know.   Entrepreneurs cannot be experts at everything and it is extremely valuable to gain a different perspective. Your valued consultants can help guide you in the direction of the best solution for your business and help you think critically about your vision and strategy.
                              
Selecting the right group of  trusted advisors is a significant undertaking and the old adage “you get what you pay for” is applicable in this case. It is important that you invest the time and resources to adequately research advisors and pick the individuals that will best complement your business. You are building a long-term relationship, so it’s critical that you engage with an expert who can offer professional counsel and you enjoy working with.

Business icons like Bill Gates, Steve Jobs and the like have put this concept into practice by surrounding themselves with the best professionals in various areas of expertise to provide guidance and complement their knowledge and skill set.
                
A beneficial way to engage your advisors is to utilize them as a “board of directors” of sorts. Share your business ideas, new concepts and key issues  with them on a regular basis to gain perspective and insight. Beyond benefitting from his or her expertise, it will also provide an opportunity for the advisor to better guide you business. The more your advisors know about the challenges and opportunities within your business, the better their ability to provide guidance.   In return, patronize and promote their business. In a relationship-based business world, there is no better gift and reinforcement of confidence in an advisor’s abilities than a quality referral.
Business Week articulated this concept in a recent article, “Your Competitor is your Customer is your Partner” 

Choose your advisor group wisely to include a mix of professionals representing the key disciplines for your business.
Bankers or other financial experts, legal for corporate structure, partnership agreements, industry documentation/contracts, intellectual property and other protections, CPAs  for accounting, tax and other financial support, academia for their connective value and as a wealth of information and prototype infrastructure you will need, marketing, advertising, communication, media, social networks, web site, internet and technology support, business coach and strategic planner, insurance for protection against risk and any industry specific specialists that apply to your particular business.
 
In summary, take advantage of the valuable resources surrounding your business and selectively apply what you glean from this group.  It can pay dividends in many ways including new business opportunties.

10 Tips for Selecting the Right Factor

When entrepreneurs need working capital for their business, a quick way to obtain cash is by leveraging your accounts receivable. Factoring companies are a great source for this type of financing. Although factoring is a pretty vanilla process, the company providing the factoring can come in many flavors. A referral from a trusted source, banker, CPA or attorney, is a good start to finding the right company. 

 

Below is a checklist of things to consider when seeking a factoring partner.                                 

1. Relationship, partnership- easy to work with, straightforward process, easily accessible.
2. Do they have capital to lend or is their credit constrained?
3. Do they have resources that can complement their financing if needed- leasing, real estate lenders, consultants, etc? It’s important to be connected to other resources and entities that can help grow your business.
4. Factoring should be flexible, so watch for monthly minimums.
5. Fully understand your costs.  Ask about exit fees, service fees and documentation fees.
6. Local flavor and relationship.  Not always a necessity especially if references check out.
7. Industry expertise beyond factoring.
8. Ability to transition from factoring to line of credit without switching entities.
9. Relationships with banks are key for future introductions.
10. Community relationship.  Are they making a difference in your area?

International Factoring Conference: A Recap

By Jeff Wright, Senior Vice President, Hennessey Capital

I recently attended the International Factoring Association (IFA) Conference in Scottsdale, Arizona. In addition to enjoying great weather (sunny and in the 90’s), I had the opportunity to join over 550 professionals connected to the factoring industry. This was the largest group ever to attend this event. In today’s lending environment, factoring is increasingly being viewed as a mainstream source of financing for small businesses that can not obtain traditional bank financing, so I am not surprised by the level of interest in the industry. The IFA is an important organization that excels in educating its members about industry trends and best practices. It recognizes the significance of the factoring industry in assisting small businesses in the current recovery. IFA is also partnering with a new association, American Factoring Association, in hiring public policy advocates to represent the industries interests in Washington D.C.. Time will tell if the government tries to implement legislation to regulate the industry.   

 

A highlight of the event was keynote speaker Barry Minkow – a unique keynote selection. Minkow shared his story about the various fraudulent acts he perpetrated. At 19, he had accumulated wealth of $26 million. His stories, while criminal, were entertaining and provided valuable insight on how small business finance companies can mitigate risk and avoid fraud. The government finally caught up with him and he spent eight years in jail. He plays himself on the screen in a movie coming out in June called “Minkow” also starring James Cahn.

 

Overall, the national IFA conference provided a great opportunity to connect with fellow factors and reinforce the importance that factoring and asset-based lending will play in supporting small business growth and the nation’s economic recovery.

 

Creating Strategic Partnerships to Build Your Business

By Joe Romeo, Senior Business Development Rep., Hennessey Capital

 

Creating partnerships can help build your business and connect you to new people and markets. The right strategic alliances can strengthen the breadth of your company through association with other related industry specialists.

 

This brands your company as more well-rounded to your client base and builds deeper bonds and support from your business partners while growing stronger inter-relationships.  These bonds can last for years, paying dividends along the way.

 

Often these partnerships become valuable referral connections for your existing clients and result in the most valuable return you can get from any client as you help them in “other areas” outside the scope of your expertise. Customers recognize and appreciate your assistance has no direct self-serving interest.

 

To get started, it’s important to find partner companies that operate in your prospects’ circle.  There are two essential components for your best alliance partnerships:  the actual companies and the individuals representing those companies.

 

The right company is any non-competing company that is well respected and interacts with key decision-makers, influencers, and your prospect customers.   It is particularly beneficial to reach out to  trusted advisors, including bankers, CPAs, lawyers and business consultants whom your prospects look to for guidance.

 

Other good candidates might be third party connections like state, local and federal agencies or associations who help businesses find the resources they need.

 

The best fit for any business will be a partner with similar values and like cultures.  The business can be at the opposite end of the product or service spectrum, but should operate with the same primary principles to yield the quickest results and easiest collaborations.

 

Equally important is the right ambassador, who should be a “rain-maker,” not a resource waster.  The individual should be an effective executive who works on the right things, is efficient, capable and “connected.” 

 

Approach:  Work to develop relationships in a complementary, collaborative manner.  This requires that you put the partner’s interests ahead of your own.  A valuable adage is “you can best get what you need by giving others what they want.”

 

In this stage, seek to understand the partner’s business and learn where they fit in/complement to your company. It is also critical to be cognizant of their key objectives. This will add value to your relationship and lead to a mutually beneficial partnership.

 

Keep in mind that everyone’s favorite station is WII-FM (What’s In It For Me) and build your approach accordingly. 

 

Team with partners in joint presentations, white papers, event exhibits or other such marketing channels to maximize your exposure and partnership opportunities. Your affiliation with key companies will increase your own company’s visibility and help you gain traction and the benefits of associating with recognized, expert partners.  This will lead to great network connections and the ROI will be measurable.  

 

BENEFIT:

Some of your partners will turn into future clients or you may need their services some day and enjoy the preferred customer treatment.

 

More traditional returns include the warm introductions you will get as your alliance partners act as trusted advisors for their clients and you are favored with the pole position as the result.

 

The ability to share ideas and get a diverse viewpoint or opinion can be an extremely valuable benefit from your strategic partners.  If you look at CEO business coaching you will see that they purposely intermix CEOs from different businesses for this very benefit.  Often a creative perspective or the view from some distant, unrelated business field will lead to a different outcome. 

 

Invest loyally with partners  before you look to make any withdrawals. This is an ongoing process, not a one-time commitment. Maintain your investment and stay on your partner’s radar. 

 

A useful resource is www.networlding.com and Melissa Giovagnoli

 

Branding/Rebranding Your Business

By Mark S. Lee, President. Lee Group, MI LLC

What will it cost you and your company if you don’t consistently communicate your value and brand?

The concept of branding has been trendy for a long time. With all the buzz, it’s important to understand exactly what this means to you, your company and everybody your company “touches.” Many people associate a brand with a logo, tagline, colors, and web design. While that’s part of your brand image, it’s clearly not the whole story. A brand represents the impression that you leave with customers, prospects and business partners. It infiltrates every contact point and requires every employee who influences stakeholders’ perceptions to be fully engaged and committed to delivering on your brand promise.

Are you confident that you’re communicating your value and therefore, your brand, effectively to your customers and prospects? Much of business failure can be traced to the way companies communicate - or fail to communicate – effectively with their stakeholders, including customers, prospects, partners, employees and anybody else who has an interest in your business. Whether you’re planning a new business, have just launched it, or have been running it for a while, it’s critical to avoid the most common pitfalls companies make communicating their value, brand and solution. In this article, we discuss branding as a tool and provide tips for you to brand your company as well as why you should consider branding yourself.

Consistently Communicate Your Brand.

Every company and individual has a brand (this isn’t just for the 100 pound gorillas of the business world). Do you know your company’s brand? This is the message that you are communicating on a regular basis to customers and prospects…it’s the impression you leave with every customer and potential customer…..even if it’s not the statement that you want to make. Your brand is communicated through every customer touchpoint - from phone to the internet and via email, direct mail, advertising and every other opportunity you have to reach out to your target market(s). Your brand is communicated by every employee in your firm from the CEO and sales team right down to your department directors and shop floor managers. Your brand is what sets you apart from others in your industry and makes you unique.

A brand can only succeed and achieve its goal of supporting growth if it satisfies three key criteria. If any of these factors fail, you risk major malfunctions to your business and bottom line:

1. Leaves a positive impression
2. Is aligned with your customers‟ needs and
3. Is delivered consistently, as promised.

Why Do People Buy A ‘Brand’ Any Way?

There are many reasons for buying a brand including the fact that the brand identity:

• Fulfills a short or long term need
• Has an emotional connection
• Has a perceived Price/Quality relationship
• Is “hot”—meaning the brand is en vogue
• Represents who you are or want to be aligned with

Let’s look at an example of how a brand has succeeded in achieving these goals. FedEx is a world leader in package delivery. Their brand and philosophy are simple—when it absolutely has to there overnight, FedEx will do it. Every employee knows and understands this. But beyond understanding this, they believe in the brand mission and understand their role in making this happen. Every employee, regardless of their position, knows the brand‟s philosophy and works to deliver on its promise. This is the only way a company can live its brand.

There are several questions you need to ask yourself to ensure you’re delivering a brand value that will generate profit, including:

1. Is the message you are conveying consistent?
2. Is this the message you want to be heard and experienced?
3. Do your customers understand how you differentiate yourself from like organizations?
4. Do they experience your brand in the manner that you want them to?
5.  Does reality align with your promise?
6. Finally, is your brand what your customers seek and truly value the most?

Components of a Successful Brand

In the past, companies would develop a product and then promote it. As a global economy, businesses continue to evolve and become more dynamic and competitive. Organizations must redefine their value and sometimes their business model in order to succeed. This redefining leads to the creation or reinvention of their brand

How do you create a unique brand? This must begin with the development of a baseline to understand your strengths/weaknesses as well as opportunities/challenges in the market place. It requires an open mindset if you‟re branding your company.  Ask the following questions:

• What is the unique valuemy company offers?
• How do others perceive this, now?
• Does this perception need to change?
• Why would I purchase my company‟s brand?

Next, you must evaluate your company‟s brand to ensure the following components exist:

• Vision: Where do I see my company going? What is my ultimate direction?
• Positioning statement: How will it be positioned in the marketplace?
• Value Proposition: What makes my company unique? What service or need does my company fulfill?
• Competitive Advantage: What makes it unique from the competition? Are I just- as-good or better than the competition?
• Leveraged Strengths: Based on an internal assessment, do we really understand our strengths and weaknesses? If so, how can I leverage these strengths?
• Communication Plan: What and how do I communicate our plan to others? What is my communication strategy?

We finish by sharing key strategies that will help you create and reinforce your company brand:

1. Focus on the Needs of Your Target Market: Understanding your target market will allow you to develop a brand position. As a business owner, how confident are you that you truly know what your customers need, want or expect from your company? Many business decisions are based on a gut instinct of what you believe customers want and not necessarily because you asked them directly. You must ask existing customers as well as former and potential customers to ensure their concerns and expectations align with the value you provide. This will translate into your brand position.
2. Recognize And Act When Outside Factors Impact Your Brand Perception. Customers do not reside in an isolated world. Recognize how external factors (i.e., recession or
   Business Owner‟s Guide to Rebranding Page 4 of 5
   varying industry regulations) might impact their decisions and their ability and interest in conducting business with you. If you recognize these and address them this will strengthen customer loyalty. Many businesses in the recession have lowered their prices to address customer challenges. As long as they did not forgo their customer value, this makes a solid impression upon customers who will stick around long after the recession has passed.
3. Carefully Review All Communication. Is your message consistent in all of your communication? This includes everything from written documents, presentations, advertising, your website, brochures and direct mail to email, sales presentations, phone calls, etc… Every employee must communicate the same brand value at every level of the organization. One employee who isn‟t consistent with delivering your value can truly cause harm to your image and your bottom line.
4. Develop a Solid Elevator Pitch: Given that an adult’s attention span is 15-30 seconds, do you have a pitch that highlights your brand in that short window? What are the key points you need to convey about the VALUE you provide (not necessarily the products and services)? It’s critical that your pitch is concise, AND compelling. The pitch objective is simple–to develop a message that ensures the other person wants to continue the dialogue.
5. Present your Company Passionately. This is your business-your baby, in many ways. Therefore, it‟s personal but you must be able to step outside of the company and honestly ask yourself, “Why would I do business with me?” It‟s a simple question, but the answer may not be so easy to address. Once you‟ve identified the answer, make sure you convey this in words as well as in your body language. A sincere passion for the value you provide will go a long way in business.
6. Take Risks to Meet Customer Needs. In this dynamic, ever-changing market, you need to evolve with the times. Have you or your company remained stagnant? What worked in the past may not be as effective today. Reviewing and tweaking your business model as well as your personal skill set will be paramount to future success. It‟s dangerous to simply stand still and not make changes nor address changes in the market. We know that risk-taking is a scary proposition but it is the key to growth and to maximize your brand value.

Branding is essential and doing this right will make the difference between success and failure for your organization.

Creating a Credit Policy that Helps You Get Paid

By Candace Pavliscak, Chief Credit Officer & Senior Vice President, Hennessey Capital

Everyone thinks of the banking/finance industry when they hear the term “credit policy” particularly with the prevalent coverage in the media as of late. I have even seen “lending policy” and “credit policy’ used synonymously in some articles but I believe what they each represent is very different. While it is true that all financial institutions have a credit policy that drives their lending practices (some better than others as we have seen), every business should have some form of credit policy.

Why should your company have a credit policy? Think about it, as a goods or service provider you are extending credit to every customer that doesn’t pay you cash on the spot for your work. You should have some idea of how much credit you are willing to extend and to whom. The basics of a credit policy can be summarized as follows:

Know your customer. How well do you truly know your clients? What reputation do they have around town or among industry peers? What are their typical payment habits? Is there an end user beyond your customer that will affect payment to you? If so, how strong is that company? It is a recommended practice to request credit references and utilize public data to analyze your customers before you begin a relationship.

Know yourself. You need to be able to determine how much risk you are willing to take? This boils down to how much are you willing to lose. As we see with personal investors, some are willing to take big risks for the possibility of larger returns and others prefer smaller returns and limited risk. Find the balance that suits your business. Remember though that no one collects 100% from all its customers 100% of the time. Also be aware of how many “good sales” you have to generate to make up for the one “bad sale.”

Have a process and make sure it is communicated to all employees. This principle encompasses everything from your sales process (do your sales people understand your risk tolerance?, will they get the reference information you want?) to your invoicing process (what can you bill for?, when can you bill it?, where do you send the bill? and what approval is needed for your customer to pay the bill?) and finally to your collections process (do you have the right AP contacts for your customer?, are you making timely follow up inquiries?, and do you have any leverage if payment issues arise?)

Having clear expectations with your customer and your employees helps to set the tone and build relationships for your company to succeed.

Creating a sound credit policy is critical to avoiding confusion with customers and keeping your company’s financial house in order. For additional resources/samples of effective credit policies, see Inc’s Finance Guide: How to Create a Smart Credit Policy

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