The problem of late payments is one which affects most businesses, especially in the current economic and post-Covid climate. The longer the wait to receive payments, the longer it takes the business to pay its suppliers, resulting in a vicious circle of late payments and crippling debts. There are a number of pre-emptive steps which can be taken to prevent late payers turning into bad debts:
- Exercise caution when issuing Credit and know your customer. Credit check all new significant customers, verify any information provided and obtain references if needs be.
- Make all your customers aware of your payment terms. Include your terms, payment options and your bank details on the invoice and ensure your contractual terms are very clear.
- Always be prompt with issuing invoices.
- Give the customer a courtesy call prior to the payment due date to make sure it has been received and there is no query.
- Create a robust diary system to ensure you are reminded to chase payment immediately upon becoming due, followed by a series of gradually more urgent reminders.
- Be wary of stalling tactics. If extensions are to be allowed, agree strict deadlines.
- Adopt a polite, professional but assertive tone. Remember, you are only chasing what you are rightfully owed.
- Always write and advise your customer that you will be exercising your statutory right to claim interest and compensation for debt recovery costs and that you will be taking further action.
- If payment is not forthcoming – don’t allow the debt to grow. Stop supplying any further goods or services.
If all else fails – contact Fairmont Legal’s Debt Recovery team on 01204 866597 or email [email protected]. We can provide you with a FREE initial consultation and advise you of the course of action that is best for your business.