We understand that as a business, you are sure to encounter debt at some point during trading. Unfortunately, late payments are becoming an inevitable part of running a company. These overdue payments can have serious implications for your business, you can miss payments to your suppliers, seriously damage client relationships and your cash flow can become unstable. We speak with hundreds of clients that are having trouble with late payments and evasive customers and many have not taken any steps to try and avoid bad debts. While late payments are not always preventable, there are some things you can do to protect your business.
When making an agreement with a new client, you should make your Terms and Conditions clear. Outline your payment terms and any discussed payment dates and clearly define any late payment charges and interest rates that will be applied in the event of a late payment. Make your terms easily accessible, add them to your website and to every invoice, this will eliminate the chance of the customer claiming to be unaware of them. We would advise that before you commence any work, get your customer to accept the terms with a signature. You can then use this if you encounter any problems down the line.
Credit reporting allows you to gain an understanding of a client’s financial history. If a client has regularly avoided payment or has a lot of CCJ’s against them then it can be a warning sign that they are financially unstable or even that they are not reliable payers. This information can help you to decide whether to trade with the client, ask for a deposit or set a lower credit limit for this particular client.
An invoice is the best device to get a customer to pay on-time. You need to ensure that your invoices have all of the necessary information so that the customer has no excuse if they miss the payment date. Include all company information, including your logo and contact details. Give a detailed description of the products/services that you provided, the more detail that you give the less confusion there will be. Detail all accepted payment methods and details so that the client has several payment options. Make sure that you have clearly outlined your follow-up process so that you can efficiently chase any non-paying clients.
If your client is not paying then you may consider putting their account on stop. This means that they will not be able to purchase any more products or procure any further services until their account is settled. This can be an effective way of clearing any outstanding debt. If the debt is a substantial amount then you may consider offering the client a settlement discount, if they can pay a one-off amount then you will reduce the debt by a certain percentage, or you can offer a discount on their next purchase if they make a payment in full.
Credit control is a time-consuming task, no matter the size of your business. If you struggle with a lot of evasive customers or you are spending the majority of your time chasing up late payments, it may be time to think about outsourcing your credit control. Agencies, like Commercial Domestic Investigations, work tirelessly and in-line with industry regulations to recover any money owed to you. If you want to find out more about how we can help your business, contact our team on 08444 159200, use our contact form or email firstname.lastname@example.org.