If a company like to decrease a bad debts. What does policies and parameters to implement as a credit controller, explain?

1. More attractive offers on cash/retail 

2. Strict credit policy

3. Effective control on collections/recoveries

Some of the points to be kept in mind in order to decrease bad debts:

1. First of all decide whether it is really necessary to extend credit facility to the client.

2. Decide whether you can afford to give long term or short term credit.

4. Prepare a very strict default clause letter and get the terms accepted by the client.

5. Do not supply without Payment guarantee ( post dated cheques or Bank guarantee, hundi etc.,)

6. Before supply collect a credit application letter signed by the customer.

7. Get signature from authorized signatory on the delivery order and invoice along with the company stamp

8. Do not supply more than the creditworthiness of the customer.

9. To collect the copy of the commercial license and bank account details.

10. Do not supply without collecting the payment for the previous supply.

Alternatively, you can offer customers a discount when they pay cash even if you do offer payment terms. If you accept credit cards, it is against the terms of service to offer a cash discount. You can, however, offer business customers who normally would take advantage of your30-day payment option a discount if they pay cash immediately. Establish a collection policy and develop a series of letters and actions that your company will take for late paying customers. For example, if the customer is30 days late, send a polite reminder letter. Follow up with a phone call seven days after the letter and again14 days later. When the account becomes60 days overdue a second stronger letter is sent, perhaps telling the customer that while you value their business, you must get paid. Collection agencies have an unsavory reputation; however, it may be necessary to assign a bad debt account to a collection agency to proceed with collections. If you assign the account, you still own the debt. The agency receives a commission of whatever they collect. If you sell the bad debt, the agency pays you a small percentage of the face value of the debt and keeps whatever they collect.

- Make use of credit check before you offer credit to customers

- Offer time-related discounts (make sure to define from religious point of few)

- Be careful when offering discounts on debts as that may affect your relationship with good payers

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