With R3 (Trade Body for Insolvency Practitioners) reporting on 22/08/16 that 23% of corporate insolvencies in the previous year were due to late-payment for goods or services, businesses need to ensure that they are doing what they can to limit their risk.
Common mistakes made by businesses include:
- Not knowing their customer (is the customer a limited company / partnership or sole trader?):
- Not doing a “credit check” on a customer before deciding whether to offer the customer credit:
- Not linking the credit or payment terms offered to the customer’s financial health:
- Not ensuring that effective terms and conditions are sent to a customer BEFORE goods or services are delivered:
- When trading with a Company, not requesting a Personal Guarantee from the Director where the Company has a poor credit rating, has no trading history or is an “unknown” quantity in terms of its financial health:
- Failing to effectively chase unpaid invoices promptly via an internal credit control process that includes calls, emails and letters at staged intervals:
- Not referring the matter to a Solicitor once the invoice passes 90 – 120 days (depending on the average in the businesses sector), in an attempt to have the invoice pushed to the “top” of your Customer’s pile.
Analysing and improving a business’ account opening process and internal credit control procedure are two simple steps that a business can take to improve its aged debtor list.
Woodfines LLP offer fixed cost commercial debt recovery for its clients. This allows businesses to chase its debts in the comfort that they know the true cost of pursuing the debt. This cost information allows businesses to make informed decisions regarding next steps. For more information on this, please contact Maria Koureas-Jones on 01234 270600.