At Certax we can help businesses with cash flow and avoiding bad debts. Here are some tips…
Bad debtors can be very dangerous for new and expanding businesses, having a damaging impact on cash flow.
Here are 10 tips for avoiding bad debts:
- Obtain a credit reference on the organisation that you intend to trade with
- Avoid doing business with companies whose credit rating is poor
- Ensure that the other company knows your payment terms at the outset
- Invoice at the earliest opportunity
- State the payment terms clearly on your invoice
- If payment is not received by the due date, send a reminder as soon as possible, and certainly no longer than one week after the due date. It is good practice to have a policy to chase the debt after a fixed number of days following the due date
- If there is still no response, chase up the debt by telephone. This will enable you to determine whether there are any queries on the invoice and, if not, to discuss a date for the settlement
- Write to confirm the agreed settlement date and send by fax or post
- State clearly that the matter will be referred (after the agreed extended period) to either:
- A debt collection agency
- A firm of solicitors, or
- The county court small claims department
- If the debt is still due after this, keep your word and take action
If you would like help with cash flow and avoiding bad debts, contact Certax.