CREDIT MANAGEMENT POLICY

Draft Credit Management Policy 1DRAFT CREDIT MANAGEMENT POLICY

1. Introduction

1.1 The Strategic Director of Corporate Resources and Services has responsibility,

under S 151 of the Local Government Act 1972, for the administration of the

financial affairs of the Council. One such area of administration is that relating

to the management of credit and the collection of debt and it is this that is

covered by the Policy.

1.2 This Policy sets out to define the credit management function, stating the

objectives and responsibilities, in order that the principles of operation of credit

management are clearly recognised and understood.

1.3 Income collection is of vital importance to the City Council, the income

generated by the Council in the form of Taxes, Rents, Fees and Charges

constitutes more than 50% of the City Council’s gross expenditure. The City

Council relies on this income to fund the services it provides and any failure to

collect income represents a risk to the sustainability of City Council services.

2. Policy Vision

2.1 The vision of credit management for the City Council is:

“To minimise the amount of non-collectable debt, through the prudent

extension of credit, the balancing of financial risk and the efficient

collection of income, within a framework of customer care and client

sensitivity.”

3. Definitions

3.1 Credit Management is defined as the management of the risks and costs

associated with allowing customers time to pay. The use of the word credit in

the context of this policy relates to the provision of goods or services for

payment at a later date.

3.2 Prudent extension of credit means supplying goods and services with

payment due generally on receipt of invoice. Payment periods (i.e. credit) may

be offered where necessary to ensure that services remain accessible but will

vary from service to service.

3.3 Balancing of financial risk means evaluating the financial risk of providing

goods and services in advance of payment and the likely prospect of recovering

sums due. For non-statutory services this necessarily involves the checking of

creditworthiness to inform decisions to provide services in advance of payment

or, alternatively, to insist on payment first where creditworthiness is in doubt.

Draft Credit Management Policy 23.4 Efficient collection of income means encouraging people to pay on time by

offering a wide variety of payment methods, including direct debit and

e.payment, and using cost effective collection methods, such as automated

reminder letters, telephone calls and personal visits. It also means making

decisions on the advancing of credit and the collection of debt in an equitable

manner. A manner which considers financial status only (i.e. ability to pay) and

not discriminating by age, gender, disability or ethnicity.

3.5 Customer care and client sensitivity means handling all customer enquiries

with courtesy and sensitivity and meeting the needs and expectations of

different client groups, including offering flexible payment options and a wide

variety of payment methods.

4. Scope

4.1 With the exception of Housing Rents and Housing Charges, this policy applies

to all sources of income across the City Council unless subject to a specific

policy relating to fees and charges or income generation previously agreed by

the City Council. The Policy applies to the provision of both statutory and nonstatutory services although the checks for creditworthiness that will be applied

to discretionary services will not normally be undertaken for statutory services.

5. System Primacy

5.1 Oracle General Ledger is the City Council’s main financial system within which

all transactions are recorded and therefore this system takes primacy.

5.2 To enable the provision of effective management information, future systems

development activities will seek to interface all debt information into the

Accounts Receivable module of Oracle. Detailed business transactions carried

out for Housing Rents, Council Tax, National Non Domestic Rate and Parking

Fines will continue to be held within other host systems, with summary balances

only transferred to Oracle.

6. Objectives

The policy encompasses the following objectives:

6.1 To administer an efficient debt collection process that is organised such that

responsibilities of departments are clearly defined and processes are well

understood and documented

6.2 To ensure that all amounts due are collected according to the agreed payment

terms and that the most efficient methods of payment are used

6.3 To ensure that the cost of providing goods or services on credit terms and the

cost of recovery is kept to a minimum

Draft Credit Management Policy 36.4 To identify high risk customers, especially those likely to get into financial

difficulties and to take appropriate action to safeguard further revenue income

and establish satisfactory payment arrangements

6.5 To maintain high quality and comprehensive accounts receivable information to

provide robust management information and accurate customer accounts

history

6.6 To operate within an overall framework where core working practices are

consistently applied across all services and best practice adhered to

6.7 To achieve performance targets in the top quartile of our comparator

authorities and aspire to continually improve

6.8 To adhere strictly to legislation, codes of conduct and professional guidelines,

taking into account the Council’s policies on equalities and considering

diversity issues

7. Responsibilities

7.1 The Strategic Director of Corporate Resources & Services (SDCRS) has a

statutory responsibility for the efficient administration of the City Council’s

financial affairs and to protect the City Council’s financial position.

Consequently responsibility for the implementation of this policy rests with the

SDCRS. All officers must comply with this policy and the SDCRS must be

consulted, and give approval, for any deviations to this policy. Where any such

deviation is a clear and substantial change to the Budget & Policy Framework,

that deviation will also require the approval of the City Council.

7.2 The SDCRS will monitor the overall debt position of the City Council and keep

under review the arrangements for the effective and efficient collection of debt.

7.3 The SDCRS will report the overall debt position to the Strategic Directors’

Board on a regular basis and will also report to the Performance Review Panel

of Members (or its equivalent) periodically throughout the year.

7.4 In the absence of the SDCRS, responsibility for the Credit Management

function is passed to the Head of Financial Services.

7.5 The Income and Payments Manager is responsible for making all

recommendations over changes to core working practices and procedures and

implementing such changes as they relate to this policy including any

associated assessment of risk.

7.6 In cases of disagreement in relation to practice and procedures, any deviation

requires the consensus of the Accountancy Manager and Head of Department.

The final arbiter is the SDCRS.

7.7 Key Accounts Receivable transactions, including the raising of high value

invoices, issuing of credit notes and making of refunds require authorisation in

Draft Credit Management Policy 4accordance with the limits and approvals set out in the Accounts Receivable

Authorisation Procedure

8. Policy Alignment

8.1 The Credit Management Policy is designed to be consistent with the following

strategies of the City Council:

¾ Anti Poverty Strategy

¾ Medium Term Resource Strategy

Anti Poverty Strategy

8.2 The main thrust of the Anti Poverty Strategy is to tackle the causes and effects

of poverty and to prevent further poverty by ensuring that:

¾ Everyone who is entitled to benefits receives them

¾ People in poverty have access to services at reasonable prices

¾ People are empowered to tackle debt

8.3 This policy does not conflict with any of these themes and aims to recover only

that which is due under other approved policies of the City Council that

conform to the Anti Poverty Strategy. This policy seeks to provide access to

debt counselling and allows for waivers to be granted in exceptional

circumstances, taking full account of the diversity of each individual’s

circumstances.

Medium Term Resource Strategy

8.4 The Medium Term Resource Strategy is aimed at delivering the “financial

capacity to deliver the City Council’s priorities on a sustainable, medium term

basis”. It intends to achieve this through a combination of reducing

expenditure in those areas that contribute less to delivering the City Council’s

priorities and increasing income. Minimising the amount on non-collectable

debt helps to achieve the aim of protecting and increasing income. An efficient

collection function also assists in the aim of reducing expenditure.

9. Principles of Operation

9.1 The Policy Principles set out below represent the standards and procedures

that shall apply to all income collections systems throughout the City Council.

Any deviation from these principles will require the explicit approval of the

Strategic Director of Corporate Resources and Services and in some

circumstances the City Council itself. Dispensations are only likely to be given

in circumstances where they further the greater economic interests of the City

Draft Credit Management Policy 5Council, avoid undesirable social or economic consequences or where the

processes in this policy are incompatible with the currently employed

technology.

9.2 It should be recognised that income derived from the supply of goods and/or

services is reduced by the cost of allowing credit terms by way of lost interest

or interest costs during the credit period; the costs of collecting outstanding

debts; and lost opportunity to utilise revenue. It is also recognised that taking

on credit risk presents the risk of losses due to bad debt, which results in total

loss of income in addition to the incurred costs of collection.

Conditions of Supply and Contractual Arrangements

9.3 Conditions of supply shall be implemented either by the customer signing a

formal contract or the customer receiving a copy of the terms and conditions

of supply prior to the service being provided.

9.4 Each service provider shall incorporate any specific regulations or

requirements in respect of charging for a particular type of provision into the

terms and conditions for that provision

Acceptance of New Customers

9.5 In general, credit terms will not be offered to new customers and payment will

be required in advance or on receipt of an invoice. In circumstances where

this would cause services to become inaccessible, customers will be allowed

credit although the credit terms will be informed by a risk assessment.

9.6 All new customers to be supplied on credit terms shall be required to complete

a customer questionnaire in advance of the supply of any goods or services.

Where goods or services are supplied under a statutory obligation or to

vulnerable groups, any deviation from this requirement is to be documented in

the specific departmental procedures and agreed by the Accountancy

Manager.

9.7 Risk assessment of new debtors shall be carried out subject to prescribed

requirements and limits for specific services. The depth of assessment

undertaken will be proportionate to the level of indebtedness to be incurred.

9.8 Approval to supply new debtors on credit terms shall be on the authority of the

Income & Payments Manager

9.9 Credit limits will be established taking full consideration of the level of risk and

the nature of the service provided and shall be granted in accordance with set

procedure

9.10 It is essential that accurate and up do date customer information is maintained

and that any amendments are notified and actioned immediately and in

accordance with the procedures for maintenance of customer account data

Draft Credit Management Policy 6Payment terms

9.11 Where recovery of income is likely to be at risk, arrangements to take payment

in advance of service provision will be made. All other opportunities to receive

payment in advance will be taken.

9.12 Where supply is made on credit terms, standard terms shall be in place for

each type of supply.

9.13 Unofficial extended payment terms will not be granted to customers

9.14 Flexible payment terms should only be considered for continuous services,

such as Community Alarm Rental, as a means of maximising the collection of

revenue and shall not exceed a 12 month period

9.15 Discounts will not be offered unless previously agreed by SDCRS

9.16 Interest may be applied in accordance with The Late Payment of Commercial

Debt (Interest) Act 1998 for business transactions, or in accordance with

contractual terms, or other applicable Statutory Legislation, to undisputed debt

that has not been paid within the agreed payment terms.

9.17 Failure to pay on time or poor payment history may result in the withdrawal of

non statutory services and future requests for supply on credit terms to be

declined.

Raising of Invoices

9.18 Responsibility for the accuracy of invoicing remains with the originating

department.

9.19 All invoices will be generated promptly and as close to the point of provision

as possible and in any event within 5 working days of that provision.

9.20 A clear description of the goods or services provided will be contained in

every invoice to assist the customer and to facilitate prompt payment.

9.21 In accordance with Financial Regulations, invoices shall not be raised for less

than the value of £25.00. Charges below this amount shall be collected in

advance or aggregated billing raised.

Payment Methods

9.22 All methods of payment shall be available to all customers for the benefit of

both the City Council and the customer and will include cash, cheque, BACS,

standing order, direct debit, bank giro credit, post office giro credit, swipe card

and debit and credit card payment in person, by telephone and via the

internet.

Draft Credit Management Policy 79.23 All opportunities for ‘netting’ should be taken, where lawful. I.e. where sums

are both due to the City Council and due from the City Council in respect of

the same customer.

Customer Service

9.24 Customers will be provided with the contact details of the originating

department on any invoices issued in order that they have access to officers

with detailed and specific knowledge of the goods and/or services provided at

all times.

9.25 As a minimum, offices will be open to take customer queries either by

telephone or in person between the hours of 8:30am to 5pm Monday to

Thursday and from 8:30am to 4:30pm Friday.

9.26 All customers will have access to their account information and history,

according to the provisions of the Data Protection Act 1998.

9.27 All customers will be encouraged to take ownership of their financial affairs.

Whilst it is not the role of the City Council to provide a debt counselling

service, where customers are facing clear financial hardship they will be made

aware of external debt counselling services.

Collection of Income – Council Tax and National Non Domestic Rate (NNDR)

9.28 Within the Council Tax (Administration & Enforcement) Regulations 1992,

recovery details are outlined. This policy must follow the guidelines in the Act.

The flow charts at Appendix 1 indicate the process of statutory recovery.

Collection of Income – Sundry Debtors – See Flowchart at Appendix 2

9.29 A series of two automated reminder letters will be generated when invoices

remain unpaid beyond the agreed terms. The process is available for all billing

raised through Oracle and is operated for specific types of billing by

agreement with the Income and Payments Manager and Head of Service.

9.30 The use of the telephone in making successful collections is a major

contributor to effective collections. The telephone will be used to contact

debtors both within and outside normal office hours to obtain payment to the

terms agreed.

9.31 All debts that remain outstanding after the normal recovery process has been

exhausted and where the debt has reached 60 days past the due date will be

considered by the Income and Payments Manager for referral for legal action.

9.32 In instances where the recovery process has failed, client sensitivity is to be

fully considered when deciding on the method of collection used to pursue

and enforce payment of that debt.

Draft Credit Management Policy 89.33 It is the responsibility of the Income & Payments Manager to ensure that all

debt outstanding to the City Council from one debtor is pursued on a

consolidated basis. Any recovery of the consolidated debt is to be offset

against individual debts according to the debt allocation rules.

9.34 All outstanding debt is to be pursued until such time as it becomes

uneconomic or disproportionate to the administrative effort required. In

determining “uneconomic”, account must be taken of the overall impact on the

City Council of non-pursuit of that debt including the likelihood that other

customers may then also choose not to pay their outstanding debts.

The use of Third Parties and Legal Action – Sundry Debtors

9.35 Legal Action will be taken after all other methods of contact have been

exhausted. Debtors subject to legal proceedings will have their access to

other non-statutory services restricted.

9.36 Legal Action will be instigated on the authority of the Income & Payments

Manager following consultation with the Department that originated the debt.

9.37 For debts considered uneconomical to refer for legal action, the use of tracing

and collection agents will be considered prior to any decision to write off the

debt.

Use of Internal and External Bailiffs (Civil Enforcement Officers)

9.38 For all litigation conducted through the Magistrates Court for Council Tax and

NNDR and through the Civil Courts for Sundry debts, processes requiring the

powers of a Bailiff (also known as a Civil Enforcement Officer) shall be carried

out by a Bailiff of Portsmouth City Council. If the defaulter is outside the City

Council area, the services of external Bailiffs will be used.

9.39 In addition to using Bailiffs in their official capacity for the collection of

statutory debts of Council Tax and NNDR, they will also make personal visits

to customers when the normal reminder procedures have been exhausted for

sundry debts. This will be to assess the circumstances of the debt and to

attempt to make a payment arrangement, prior to the commencement or

enforcement of legal proceedings. In these situations the Bailiff will be acting

in the capacity of representative of the City Council, and due consideration will

be given to the individual circumstances of the debtor.

Draft Credit Management Policy 9Other Enforcement Action

9.40 Other forms of recovery action that may be used in order to secure a debt are

as follows:

• Attachment of earnings

• Attachment of Benefits

• Charges of properties

• Filing for bankruptcies and liquidations

• Use of small claims court

Bad and Doubtful Debts and Bad Debt Write Offs

9.41 Bad debts incurred will be notified to the Income & Payments Manager and

the Head of relevant service immediately either is aware of the situation.

9.42 Provisions for bad and doubtful debts shall be reviewed on a monthly basis

and variations reported upon as part of the month end budget monitoring

process. Sufficiency of provisions will be amended annually.

9.43 The Strategic Director of Corporate Resources and Services or any officer

delegated by him must approve the write off of any debt in accordance with

the Write Off Policy and Financial Regulations.

Insolvency

9.44 The Income & Payments Manager will be responsible for the reporting of all

insolvencies.

9.45 Responsibility for the monitoring of insolvencies, completion of documentation

and representation at creditors’ meetings shall rest with the Income &

Payments Manager

Dispute Management and Credit Notes

9.46 All disputes regarding invoiced charges and fees shall be recorded, monitored

and reported on in accordance with departmental procedure, every endeavour

being made to ensure disputes are resolved within the reasonable timescale

prescribed in that procedure

9.47 Credit notes will only be raised following the correct process and Authorisation

procedure.

9.48 Charges will only be reduced or cancelled where an error has occurred.

Debts properly due but not collected will be pursued to the point of write off.

Draft Credit Management Policy 10Management Reporting

9.49 Levels of debt will be monitored on a monthly basis using the following data:

• Level and ageing of outstanding debt in aggregate and by type

• Details of Accounts that have been referred for Legal Action

• Level and status of invoices held in query

• Number and value of credit notes raised and credit to invoice ratio

• Analysis of debts written off

• Analysis of doubtful debts

• Analysis of high risk debtors

• Days Revenue Outstanding

• Value of debts subject to repayment plans

• Cash against revenue

10. Policy Review

10.1 This policy shall be reviewed annually by the Strategic Director of Corporate

Resources and Services and should any amendments be deemed

appropriate, these will be recommended to the Executive and City Council for

formal approval.

LAST UPDATE: 21.09.06

Draft Credit Management Policy 11

Unless you've been sound asleep for the last several months, you know that the global economy is in a serious crisis. And it's not just the brokerage houses and financial institutions that are in trouble. Businesses around the world are facing formidable challenges in a struggle to survive.

Most companies are not going to get multi-million dollar government bailouts. It's up to each company to make the tough decisions, chart its own course, and take a hard look at what it needs to do to survive. Getting serious about efficiency and effectiveness in handling receivable management needs to be a focus.

According to the Association of Executives in Finance, Credit & International Business (FCIB): "As global markets tumble and bank lending freezes, the role of trade credit as the main source of cash has become even more prominent."

The Credit Research Foundation, in a recent publication - Lessons for Business to Learn from Today's Credit Crisis - makes corporate priorities clear: "Your organization's mission at this point should be to abandon the thrust to increase revenues and garner market share in favor of increasing cash flows and profitability."

Credit and receivables have stepped to center stage. And it's time to get serious about improving management of this increasingly valuable asset.

Key #1 -Effective Credit and Collection Policy

Effective credit management is about developing consistency in your credit and collection processes. This, in turn, will ensure efficiency in your entire revenue cycle.

The secret to consistency is a thoughtfully designed and actively implemented credit and collection policy. Such a policy has power to breathe new life into your entire credit-to-cash process. Even if you already have a credit and collection policy, it's important to review it on a regular basis to assess its effectiveness and to make sure you are following it.

The CRF (Credit Research Foundation) web site's Credit Assistant is one of the best resources available on the particulars of credit management. Click on "Credit Assistant" on the CRF home page (www.crfonline.org) and you will find a wealth of information on just about every aspect of credit management.

For help in developing your credit policy, select "Organization and Administration" from the left-hand navigation on the Credit Assistant home page. Then click on Developing a Credit Policy. This article even includes a credit policy worksheet to help you develop your own policy.

Key #2 - Due Diligence

As lines of credit dry up, your customers are going to start looking to trade credit as a source of working capital. Current customers may ask you to extend your terms or stretch out their payments. New customers may request very liberal open account terms.

But beware - now is not the time for short-cuts in credit decision-making. Treat every credit sale as if it could become a potential collection issue.

With current customers, don't assume they're okay now because they were okay last year. Review the creditworthiness of all of your important customers. Today's business climate is

erratic, to say the least. Companies that appeared secure six months ago may now be on the verge of collapse. Set up regular reviews to monitor each customer's creditworthiness to keep a step ahead of bad debt write-offs. In particular, credit applications, financials and participation in industry credit groups can help you develop the information necessary to making a reasonable decision about extending credit to both new and existing customers.

Credit Applications

If you don't normally use credit applications, start using them now. If properly constructed and executed, the credit application serves as an information-gathering tool that can also function as an enforceable document if litigation becomes necessary.

Financial Information

Consider this. When you go to your banker for a loan, you expect him to require financial information. When a potential buyer asks you for credit terms, the extension of credit is no less a loan than that given by your bank. Yes, financials are often difficult to obtain. But an analysis of financials is critical to determining whether a customer is worth the risk of an unsecured credit facility.

Again, the "Credit Assistant" section of the Credit Research Foundation provides valuable information on Financial Statement Analysis. Click on the Customer Financial Assessment section (Task Index) to find a series of topics on Customer & Financial Statement Analysis.

Industry Credit Groups

Credit managers routinely use credit bureau reports as a source of data for determining the creditworthiness of a customer. These reports may include general and dated information on a company's financial position and credit history from various unidentified sources. In recent years, commercial credit reporting agencies have enhanced their offerings with items such as credit scoring, on-line access, and links to websites containing public record information.

These one-size-fits-all credit information solutions fall short, however, when it comes to providing the industry-specific information credit managers need to round out a customer's financial profile and payment history.

Recognizing the limitations of traditional generic trade reports, credit professionals are discovering that membership in industry credit groups fills the gaps, helping them develop more complete credit histories on both new and returning customers. The net result is a faster, more accurate, cost effective solution for managing the risks associated with extending credit.

Key #3 - Protect Your Sale Wherever and However Possible

There are a number of ways to protect your sale when selling domestically or internationally. The place to start is at the beginning. By appropriately structuring your sales contract (and/or credit application), you can build future protection in case you need to litigate. A well-written contract can make the litigation process easier and faster, and the likelihood of success much higher.

The Bernstein Law Firm outlines three things you can do to Improve Your Chances of Collecting from a Risky [Any] Customer:

(1) get written personal guaranties of payment from your customer's principals; (2) retain a security interest in various assets; and (3) include a confession of judgment clause as part of your sales agreement or credit application.

Certain sales instruments also offer extra security when selling on credit. Including:

Letters of Credit - see CRF Credit Assistant (Collateralization / Securitization) Bills of exchange (D/P and D/A Transactions)

Also consider factoring (CRF Credit Assistant - Collateralization / Securitization) or trade credit insurance, and, of course, perfecting a security interest in your customer's assets.

Key #4 - Focus on Cash Flow

Businesses today cannot afford excessive write-offs or large numbers of delinquent accounts. Few business owners will dispute the fact that cash is king. A lack of operating cash was the primary "cause of death" for many U.S. "dot-coms" in the early 2000s. Poor cash flow management continues to result in the collapse of business enterprises, large and small, worldwide.

One of the most common cash traps is uncollected sales, a.k.a. accounts receivable.

How can you improve your cash flow? By reducing your Days Sales Outstanding (DSO). And how can you reduce DSO? By training your customers to pay on time - and that requires constant attention and follow-up. With receivables, it's really "the squeaky wheel that gets the grease". You want to be at the top of your customers' payment list. How do you get there? Either by providing the most essential product or service; the one your customer can't stay in business without. Or, by regular follow-up that keeps you in front of your customer on a consistent basis.

In Methods for Improving Collections, another CRF Credit Assistant article, the CRF recommends "Systematic follow-up of [all] accounts", which "reinforces the serious nature of the outstanding debt and emphasizes the importance attached to it by the creditor [you]." Also, "it is important [essential] to keep contacts on a strict schedule." The CRF encourages every credit department to set up a matrix of delinquent customer contacts, which might start shortly after the invoice becomes delinquent.

We recommend you consider following up even before the invoice becomes due. A letter or call letting the customer know the product has been shipped, when it should be received, whom to contact if there are any questions or issues, and when payment will be expected goes a long way toward a happy client and on-time payments.

Key #5 - Know When to Call in Outside Assistance

No one can do it alone. Many credit professionals struggle under the weight of increased scrutiny, expanded responsibilities, and static resources. Bogged down with daily operations and growing responsibilities, how can you make the changes necessary to improve overall business performance? One way is to outsource 1st or 3rd party collections.

First-party Collection Outsourcing

First-party collection outsourcing is nothing to be afraid of. Most credit departments today cannot afford to hire all the staff they require to touch all of their credit or delinquent accounts.

The organizational benefits of outsourcing are well documented. A recent survey by The Hackett Group noted that "World-class companies spend a higher percentage of time on strategic vs. transactional activities. World-class companies outsource 66.6% more than non-world class firms."

By providing a consistent, efficient, technologically current process, outsourcing A/R collections offers opportunities to address the immediate challenges facing credit managers. At the same time, the systemic improvements that come with outsourcing create benefits that will help the credit department achieve its broader goals.

For those not yet ready for a total outsourcing commitment, a partial outsourcing solution offers a low-risk entry into outsourcing's benefits. By outsourcing only a selected portion of its A/R function, the organization can determine if it: (1) is comfortable with outsourcing in general; (2) has selected a provider with the right capabilities; and, (3) has the internal capabilities to successfully manage an outsourcing project.

Among companies that should definitely consider partial outsourcing are those that: require a few more receivable collection FTEs (full-time equivalents); have occasional need for increased staffing; or, feel their internal processes are ineffective and would like to benchmark them against a professional receivable management firm.

Third-party Collections

Even with the best credit management procedures and great care in approving credit customers, some accounts are going to go past due. And most companies, at some point, need the services of a professional collection agency.

If your buyer hasn't paid in 90 or more days, you shouldn't hang onto the account any longer.

Professional commercial collection agencies have the clout and local contacts to convince your debtor you're serious about collecting your money. They can also help with legal action and most have networks of attorneys that can sue in any jurisdiction.

Another advantage: most collection agencies work on a no pay/no fee (contingent) basis. So, in essence, you have nothing to lose by placing an account with them. If they can't collect it, you don't have to pay them.

Focus Your Efforts on Effective Credit Management

Your company didn't cause the current credit crisis - but it's going to be up you to ensure your business survives it.

1. An effective credit and collection policy2. Due diligence3. Protecting your sales4. Focusing on cash flow5. Seeking outside assistance

These 5 Keys to Effective Credit Management provide a valuable check-list to help you focus your efforts.

Loral Narayanan is Editor of the Credit-to-Cash Advisor, a monthly, educational e-Newsletter sponsored by ABC-Amega Inc. -- [http://www.abc-amega.com] -- a global receivable management firm doing business in the U.S. and around the world since 1929. ABC-Amega, which has twice been honored by the U.S. president, provides 1st-party Collection Outsourcing and 3rd-party Commercial Debt Collection in the US and 200+ countries.