Top 5 tips for collecting debts

Article

31 January, 2008

1. Information, Information, Information.

Remember that credit control starts when the first contact with a customer is made, not when the invoice is overdue. The more you know about the customer, the easier it will be a) to assess their credit risk at the outset so that you can take preventive measures and b) the more likely it is that you will get paid if the need to 'go legal' arises.

2. Get the terms right.

Ensure that all trading is done on your, carefully drafted, terms. That way you can stack the odds in your favour, by retaining title so far as possible over goods delivered, get interest and debt recovery charges on sums overdue, and even have personal guarantees from the customer's directors.

3. Credit is everyone's responsibility.

Avoid the temptation for sales people to leave credit control to the accounts department. Ensure sales have responsibility and are motivated to chase the customer as well

4. Don't be afraid to ring.

Too often the credit control procedure is a polite letter, followed by a firm letter, followed by a nasty letter. Letters are too easy to ignore, and while they are a useful record of attempts to get paid, a simple telephone call might either elicit a genuine reason for non payment or allow some other form of accommodation to be reached.

5. Speak softly, but carry a big stick.

The aim is to make payment of your invoice the customer's priority. Ask the question, if they can pay staff wages why are they not paying you? Because staff will not work without wages, so wages are their priority.

At Forbes Debt Collect we can use the full might of the law to apply pressure on debtors, either through the County Courts or via insolvency procedures. We charge a fixed fee of £17.50 plus vat for a letter which, on commercial debts, can be more than covered by a 'late payment charge' you are allowed by law to add.

Alison Nelson heads up the Debt Collect team at Forbes Solicitors. She can be contacted on 01254 222399 or email Alison Nelson

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