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Top 10 tips on making invoice debt easier to recover for your business

1.  Know your client

Ensure you have the correct company name and trading name,  an up-to-date address and check it is still current regularly. Before entering into a new contract with a client it may be worth doing a credit check and a Companies House search to confirm who the directors are and to check that the company is not in an insolvent process.

2.  Contract

It is essential that you and the contracting party are aware of the agreed terms of business and the . Make sure you have recorded that your client has received a copy of the contract and how the client agreed to it e.g. signature, or over the telephone. It is always good practice to keep up-to-date records of all contracts so that they can easily be referred to if and when required.

3.  Invoices

Invoice your clients on time. Providing a clear narrative within invoices avoids any doubt as to what the goods and services were, and avoids any unnecessary administration dealing with queries from the client. Providing payment terms and how to make payment can make it easy for the client to pay without having to check further documents for payment information. Calling the client a few days before the invoice becomes outstanding can be helpful to check they have received it and that it is not disputed.

4.  Terms and conditions

In the ever changing market place it is important to keep your terms of business up to date to be in line with market trends and to ensure you are not missing anything. Each time you contract with a new client you should review your terms to ensure that the figures are in accordance with what has been agreed. If your terms need reviewing our Commercial Team can assist you with this.

5.  Client contact

You are much more likely to recover your debt if you are able to maintain contact with your client. Keeping a record of your client's contact details and an up-to-date business address, telephone numbers etc. can be key to ensuring invoices are paid promptly.

6.  New Clients

If you are unsure about a new client, you should consider asking them to provide money on account or consider a personal guarantee.

7.  Limitation

Be aware that limitation dates apply to invoice debt. Typically, court proceedings must be issued within 6 years from the date of the invoice.

8.  Credit Control Policy

Have a clear policy on what happens when an invoice is overdue and ensure all staff are aware of this. If a client has not paid after a certain amount of time you could consider whether to cease providing goods or services to them until payment has been made. If this does not elicit payment, this may be the stage when legal action is required to encourage payment. Don't leave it too long. Before court proceedings can be issued, the relevant pre-action protocol must be complied with giving debtors between 14 and 30 days depending on whether they are an individual or a business.

9.  Deadlines

Once a deadline for payment has been agreed, it is important to stick to it and ensure all staff are aware of this. Make sure your client knows this is the final deadline by following up a few days before to remind them. You do not want the client to think they can keep extending the deadline whilst they pay off creditors that are more strict on deadlines.

10.  Warning Signs

If a payment is overdue this could be a warning sign. It is worth keeping a record of how long it usually takes specific clients to settle their accounts and being on the alert for increases. You need to consider that you may not be the only creditor owed money by this client so acting quickly can be essential for a full recovery. You do not want to find yourself in a position where other people owed money have already seized all the debtor's assets whilst you are still relying on empty promises of payment or that the debtor has entered into an insolvency process.

 

Comment: Ashfords' Asset Recovery Team are instructed to deal with issues on a daily basis that could potentially have been avoided . It can be difficult juggling all the different elements that come with late payment as well as the many other responsibilities that come with the day to day running of your business. The teams at Ashfords can support your credit control function, ensuring pre-action protocols are complied with as well as the next steps that can be taken to recover your debt. If you have any queries about this please contact Holly Ransley who will be happy to assist.  

 

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