10 May 2022
It can be very easy to “take your eye off the ball” and lose sight of what is happening with late invoices, missed payments and even a disputed account. All can have a major impact on your cashflow and the longevity of your business.
Taking some simple steps can vastly improve your chances of getting paid whilst retaining business relationships with your customers.
Ensure you have a debt recovery process in place
Many businesses simply do not have a process in place. When customers fail to pay, they are chased by email or by telephone, but it never really goes any further. By having a formal debt recovery process in place - and staff responsible for following that process - greatly improves your business practices and profitability.
Don’t delay – take action right away
When you have a proper debt recovery process in place, your staff responsible for chasing debt should act promptly when payments are late. Failure to act promptly can mean debts pile up, making it more difficult for customers to settle the full outstanding balance. In addition, if you don’t take prompt action, customers will get into a habit of making late payments.
Send correspondence
Send a letter by post and email to late paying customers. This lets them know you are serious about escalating the issue whilst keeping it within your control.
Your letter should be firm but fair offering your customer payment options and the ability to discuss the outstanding debt with you.
Partner with a firm of debt recovery solicitors
What to do if a customer simply won’t pay? Whilst where possible you won’t want to damage a business relationship; a non-paying customer is detrimental to your business, and it may be time to get the help of a firm of debt recovery solicitors.
Aldridge Brownlee’s Debt Recovery Team don’t just take court action; we can send letters on your behalf. Letters from a solicitor often prompt debtors into paying as they worry that you might be considering further action. Of course, you may need to take court action where a debtor refuses to make payment or come to an agreement with you.
Our Debt Recovery Team will be able to look at all the circumstances of your case and advise you on the likelihood of recovering what is owed to you. We can also advise on the best course of action and present your case in court if necessary. While you may be concerned about how much legal work costs, it often possible to recoup some if not all of your costs by claiming late payment fees and interest for business-to-business debts where applicable.
Terms of Business
We can also prepare new or review your current Terms of Business to ensure that you have these in order. In certain business sectors it may be beneficial for you to consider obtaining Personal Guarantees from your business customer’s Directors so as to ensure that you have the best possible chance of recovering monies you are owed, should a business customer become insolvent. We can also advise regarding Personal Guarantees and how best to implement these into your normal processes.
For an informal chat about your business requirements or to instruct us in business-to-business debt recovery matters please contact Lesley Curtis, Head of Debt Recovery
