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1. Terms & Conditions
Ensure that you have up to date and thorough terms and conditions which you can enforce if the need arises. Your terms and conditions should deal with terms for payment, late payment issues, retention of title and dispute resolution.
2. Know Your Customer
It is important that you know who you are dealing with before you start trading. Ideally your customer will complete a credit account application form before you start trading with them but if this is impracticable then you should at least ensure that you obtain their full business name. If the customer is a limited company you should obtain the company number and if it is a sole trader or a partnership you should know the names of the individuals who own the business. If things go wrong you cannot take any action if you do not know who to sue.
3. Consider whether you should be trading with this customer at all?
It is not always practical to obtain a credit report on every new client particularly if the transaction is of a low value and in any event, credit reports are often out of date or of limited use. However, when the value of the contract is high and if non payment would damage your business you should do some basic checks before dealing with a new customer; these basic checks may include a credit report; verifying the customer’s identity via the internet; a search at Companies House and a Winding Up / Insolvency Register search. You should also consider obtaining account guarantees.
4. Implement Strict Credit Management Procedures
Ensure that your credit management procedures are documented and that all the relevant people within your organisation are aware what they should be doing on a day to day basis including sending terms and conditions before you supply goods or services; checking identity of customers and/or completing credit account application forms; credit or other reports; dispatching invoices within a set period of delivery date and chasing overdue invoices immediately. Once you have documented procedures in place ensure that you stick to them.
5. Chasing Accounts if they are Overdue
Do not be afraid to ask for money if the accounts are overdue. Debtors will pay those who shout the loudest. Deal with bad debts promptly – when you have exhausted your own credit procedures and the debtor has still not paid it is now time for you to consider sending a solicitor’s letter.
Most debtors will pay upon receipt of a solicitor’s letter demanding payment within seven days. Indeed some debtors will not pay until they receive a solicitor’s letter.
Denison Till’s Debt Recovery team will send a solicitor’s letter of demand at a cost to you of £10.00 plus VAT. Go to debt recovery for further details of our debt recovery service.
For further advice or information please telephone Johanne Spittle or Emma Major on 01904 611411.
