Opinions and insight from Roythornes' Debt Recovery team.
Prevention is better than the cure when it comes to debt recovery
- AuthorCatherine Rickett
Whilst some current issues are out of everyone’s control, i.e. Brexit, what is vital in this difficult time is having a sound credit control system. We understand that you may have had the same clients for years, and agreements may well be long-standing word of mouth agreements. You may feel uncomfortable about chasing your clients for payment, for fear of losing valuable future business.
How to avoid the common pitfalls
The first thing to think about is letting your customer know when you expect to receive payment. If you issue an invoice, state on the invoice how long you will be giving for payment. Speak to your customer about when you expect payment to be received, and be clear about your expectations. Think about having standard terms and conditions to confirm the expected timescale for payment.
Make it easy for your customers to pay. The easier you make it, the more likely they will pay you. Consider having card payment facilities, BACS, direct debit, online payments or even PayPal.
Do you know your customer? Consider undertaking a credit check on new or even existing customers if you are having difficulty in obtaining payment. It may be that your customer is unable to make payment due to their own financial problems.
Consider applying an incentive for early payment. Money is better in your pocket than theirs and whilst you may feel uncomfortable lowering your prices for early payment, sometimes it can cost more to recover debt than any discount applied.
Have clear procedures. You need effective systems in place, with standard letters going out on the day after an invoice is due, seven days after etc. It’s not an ad hoc ‘admin chore’; you need to be strict with yourself and your customers.
How we can help
If we can help to ease the burden, bring us your files and let us do the debt recovery chasing for you! We are often instructed to collect debts due by way of ‘soft’ chasing, and have great success on our telephone collections service, where you pay a 6% commission on any money we recover for you. Asking a solicitor to make those calls and chase the debts shows you mean business. We often find that a quick phone call from us to our client’s debtor is all it takes to make the money magically materialise. Pre-action letters are from just £5 + VAT.
Don’t be afraid to take action, and don’t be afraid of chasing a customer for fear of losing them – if they’re not paying they are a very real threat to your business and livelihood.