Forbes Collect Article
06 December, 2016
According to Zurich's latest SME Risk Index, over half of Britain's SMEs have problems with late payment, with £225bn in unpaid invoices.
These figures highlight the common problem of late payment. Unpaid invoices can have severe consequences for your business.
Our approach at Forbes Collect is to help you be proactive in preventing bad debts accruing and minimise the disruption (and maximise the return) when they do.
There are four ways this can be achieved:
1. Have a clear credit control procedure
Smaller and rapidly growing businesses tend to prioritise sales and extend payment terms in order to win further work. Alternatively, the processes for effective credit control may not yet be in place, meaning that debts are allowed to accrue.
Ensure you have effective and automated credit control procedures in place so the customers know they are not going to be allowed to use you as a source of cheap (or free!) finance.
Some of our clients also use Forbes Collect as an extension of their credit control. This can help to maintain business relationships by de-personalising the process and also encourages earlier payment.
2. Know your customer
This seems simple however it is crucial to maximising your return on invoices.
3. Clear terms and conditions
It is essential that you have clear terms and conditions of business covering aspects including payment terms that are incorporated into your agreements. Ideally, there should be a signed order form or contract at the commencement of any dealings.
Clear terms of business and documentation reduce the chance of uncertainty and therefore maximise the chances of being paid on time.
4. Add interest and late payment compensation to your debt
Interest at 8.25% and compensation between £40-100 can be charged on each unpaid invoice. You are legally entitled to recover these sums if a business customer is late paying. These are automatically added to the debt during the Forbes Collect recovery process, thus maximising your returns.
In summary, there are a number of steps that you can take to prevent debt from accruing, from ensuring tight credit control to getting to know your client or customer. However, if you are having difficulties in recovering monies we at Forbes Collect will help you maximise your return.
If you have a problem with unpaid invoices and would like help with collection give our Forbes collect team a call on 0333 207 1148 or email firstname.lastname@example.org.
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