How to collect debt

Collecting monies owed from late paying customers or clients can be time consuming and a drain on resources, especially if you are responsible for running your business day-to-day too. Outstanding invoices can also be dangerous particularly for small businesses; disrupting cash flow, which can lead to financial difficulty.

The best way to collect debt is to ensure that you already have an effective and proactive credit control procedure in place, know you customer and have clear terms and conditions.

Proactive credit control procedure

Having effective and automated credit control procedures in place will mean your customers and clients know they cannot get away with paying late or using your company as a cheap or even free source of finance.

Some of our clients use Forbes Collect as an extension of their credit control. This can help to maintain positive business relationships, while depersonalising the debt collecting process and it also encourages earlier payments, which will help to keep your cash flow healthy.

Know your customer

Knowing your customer is the mantra of every business but it should not just apply to your marketing and sales teams; it is also important for your finance department to understand them and it can be crucial to maximising your return. Important factors to consider are:

  • The legal entity of your customer. For example are they a limited company or a sole trader
  • Complete a credit application and conduct a risk assessment on the potential customer before they come on board
  • It is always worth getting personal guarantees for directors
  • Keep up to date records

Clear terms and conditions

Having clear terms and conditions, which are explained to the customer or client from the outset, is essential for maximising your chances of being paid on time. Ensure that your terms and conditions include the following:

  • Payment terms
  • Late payment terms
  • Timescales for payments

Make sure the terms are signed and agreed to as part of a contact before your dealings commence.

Contact Forbes Collect today on 0800 689 4176 or email us on forbescollect@forbessolicitors.co.uk

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