November 20, 2011 - The crane and access industries have never excelled at credit control and cash collection, to the point that it has caused the demise of many an otherwise good company.
Over the years things have improved ….a little, manufacturers are certainly tougher than they used to be and get caught far less often than in the past, although long terms and delivery of product before determining how, or if, the buyer can or will pay still occurs in some places, especially in the access market.
Rental companies on the other hand, in both the crane and access markets have not improved much. All too often fraudsters get away with thousands, as rental companies give them significant amounts of credit which they would never get from any other supplier. It could be that companies are all too glad to get an order- any order - and almost don’t want to know that the customer can’t or most often won’t pay.
Don’t get me wrong, many companies have tightened up their credit control and collection policies and they range from the smallest to the largest businesses. Poor credit control is not related to size, more to poor management.
One area that appears to catch out even the better managed companies are those contractors that move onto new suppliers when they are cut off by another. All too often one rental company spots a competitor delivering equipment as it is collecting its own machines due to non-payment. This is ridiculous, although some will of course take the view that allowing a competitor to get caught too is no bad thing – not a mature attitude.
Allowing contractors to get away with this is not only bad for the rental industry, it is also bad for the construction industry, allowing sloppy operators to undercut better companies who pay their bills – some of them on time.
There has been talk in the past of rental companies exchanging information on customers, so that poor or non-payers can be blacklisted in the same way as banks and other traders blacklist them.
This is of course a delicate area in that if not properly managed it could fall foul of competition rules. However if properly organised and independently administered this need not be the case.
In fact online credit check operations already exist, which not only allow companies to check out new customers, but also to be alerted to problems that occur with existing clients. However for such systems to work, it requires the majority of industry ‘players’ to participate.
Perhaps now is the time for us all to sharpen up our credit control and collection practices? After all the next 12 to 18 months are quite likely to throw up a higher level of insolvencies as stretched companies overtrade or as banks decide that it is time to pull the plug as the economy improves.
We appear to be sliding into an era where truth and facts are seen as disruptive irritations, not only by outspoken ‘populist’ politicians, but increasingly of large companies and industry associations.
Would companies benefit financially from being more open, honest, transparent and truthful?
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