Collecting from trade customers and handling late payment

If you distribute or wholesale, you almost certainly sell to trade customers on credit. Net-30 and net-60 terms are normal, and offering them is often the price of winning the account. The problem is timing: the cash to buy that stock has usually already left your business and gone to your suppliers, so every day a customer pays late is a day your own working capital is doing someone else's job.

Late payment in trade is endemic rather than exceptional, so the goal is not to eliminate it but to manage it. This guide is about the discipline of collecting: setting clear credit terms, vetting new accounts before you extend credit, invoicing promptly and accurately, taking deposits where they make sense, and following up overdue invoices in a structured way. It is distinct from the wider working-capital question of the timing gap itself; here the focus is getting the money in.

Set credit terms deliberately, not by habit

Credit terms are a commercial decision, not a default. Before you grant an account net terms, decide what you are actually offering and write it down.

• Define the terms in writing. State the payment period, when the clock starts (invoice date or delivery date), the currency, and what happens if payment is late. Vague terms are the easiest to dispute.
• Match the term to the customer, not the market. A long-standing account with a clean record can earn longer terms; a new or marginal one should start tighter, perhaps part-prepaid or on shorter terms, and earn more as trust builds.
• Set a credit limit per account. A limit caps how much you have exposed to any one customer at a time, so a single failure cannot take an outsized bite out of your cash.
• Make the cost of credit visible internally. Long terms are effectively you lending your customer money. Treat them as a concession you grant on purpose, not one that drifts in over time.

Vet new accounts before you extend credit

The cheapest bad debt to avoid is the one you never take on. A short check before opening a credit account is far less painful than chasing money afterwards.

• Run a credit check on new trade customers. Independent checks give you an outside read on whether a business pays its bills, separate from how friendly the sales conversation felt.
• Ask for trade references. Other suppliers who already sell to the customer can tell you how they actually pay in practice.
• Confirm who you are really dealing with. Get the correct legal entity, registered address and the right billing contact. Invoicing the wrong entity is a common reason payments stall.
• Start small. A modest opening limit, raised once the account has paid cleanly a few times, lets a customer build a track record with you without putting much at risk.

Invoice cleanly and use deposits where they fit

A surprising share of late payment is self-inflicted: invoices that go out slowly, miss a reference, or contain an error the customer can use as a reason to hold off. Tighten the basics and you remove the easy excuses.

• Invoice promptly. The payment clock usually only starts when the invoice is issued, so a delay in invoicing is a delay in getting paid. Send it as soon as the order ships or is delivered.
• Make invoices accurate and complete. Correct prices, quantities, purchase-order reference, due date and payment details. Anything missing or wrong is a reason to query rather than pay.
• Match the paperwork. When the purchase order, delivery note and invoice line up, the customer's accounts team can approve it without friction. Mismatches are a classic cause of stalled payment.
• Take a deposit where the order or customer warrants it. For larger orders, newer accounts or bespoke goods, a part-payment up front reduces how much you have exposed and signals commitment from the customer.

Follow up overdue invoices with discipline

Collection is mostly a process problem. Accounts that chase consistently and politely tend to get paid sooner than those that chase erratically or not at all, because customers prioritise the suppliers who pay attention.

• Have a fixed chase schedule. A predictable rhythm, for example a reminder shortly before the due date, then follow-ups at set intervals after it, beats ad-hoc chasing.
• Escalate sensibly. Start with a friendly reminder, move to a firmer request, then involve a senior contact or pause further credit if it keeps slipping. Keep the relationship intact where you can.
• Keep a clear record. Note who you spoke to, what was promised and when. A documented trail helps if a dispute hardens and shows the customer you are tracking it.
• Watch the ageing of your receivables. Reviewing what is outstanding and how overdue it is, by customer, tells you where to focus and warns you early if one account is drifting.

How Altery fits

Collecting is partly process and partly plumbing: you need to receive what customers owe, see it arrive, and tie each receipt back to the right invoice. Altery helps with the plumbing.

If you sell across borders, you can receive customer payments in multiple currencies and hold balances in USD, EUR and GBP, so an overseas customer can pay you much like a local rather than forcing a conversion at their end. Receipts show up against real-time balances, so you can see money land as it arrives instead of waiting for an end-of-day view, which makes it easier to know exactly which accounts have settled and which are still outstanding.

Because incoming payments are recorded with clear detail, you can reconcile receipts against invoices more easily and spot a customer who is drifting overdue. If you run more than one trading entity, multi-entity management keeps each one's receipts and balances separate, so collection stays clean per business. You can also ring-fence funds in dedicated pots, for example setting aside the cash an order's deposit represents.

Altery is not a bank, and this guide is general information, not advice. Use it to sharpen your own credit and collection process, then confirm the specifics for your business.

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