How to Tackle Debt Head On - 10 Top Tips

Sept. 15, 2009 - PRLog -- 1) Credit Application Form
•   Know who you are dealing with. Is the business a sole trader, partnership, limited company or limited liability partnership?
•   Ensure that you obtain a copy of the business letterhead.
•   Ask for bank details and trade references.

2) Credit Limit
•   Decide on a limit and stick to it.
•   Consider asking the business to pay up front, which in turn will help to establish credit worthiness.
•   Decide on an agreed date for payment e.g. 7 days/30 days from invoice/month end or immediately.

3) Monitor Accounts
•   Regularly monitor accounts and swiftly chase up debts.
•   Assign this task as an employee’s responsibility. It is not something to be done as and when time permits.

4) Telephone, Email and Fax
•   Consider using the above forms of communication as they are much quicker than the post.
•   Keep accurate notes of telephone calls including who you spoke to and when (both date and time).
•    Obtain confirmation that the account is not disputed.
•   Get an agreed date for payment or payments of instalments. Also agree that if an instalment is not paid, then the entire balance becomes due.
•   Confirm by fax and chase promptly if the payment does not arrive.

5) Queries
•   Any queries should be sorted out quickly.
•   If a customer raises a query on their account investigate it thoroughly to establish if there is any merit in it before taking legal action against them.

6) Never Simply Threaten
•   Inform the business of what will happen if payment is not received.
•   If payment is not received, take action, as you said you would.

7) Is the Business Worth Pursuing?
•   There is no point obtaining a judgement only to discover that the debtor has no money or assets. The hardest part can be getting paid once judgement has been given.

8) Is the Debt Worth Pursuing?
•   How much of your time will it take to recover the debt?
•   Is it worth it?

9) Use the Right Expert
•   Use an expert who specialises in debt collection. They will explain options and you can both agree on a strategy for the recovery of debts, taking into account the requirement of any debt insurance.

10) Never ever, ever...
•   Grant more credit in total than you can afford to lose.

Mark Gardner said: “Unfortunately, most businesses will suffer customers who don’t pay their bills at one point or another – and the current recession is not helping.

“What ever the economic climate, bad payers can spell trouble for a company, no matter what its size.  However, Latimer Hinks’ ten-point plan should help give business owners the necessary advice to try to protect their business.

“Some businesses largely concentrate on generating orders, but they need to remember, a sale is not a sale unless the product/service has been paid for.  Doing their homework on a potential client’s financial credentials, putting safeguards in place and seeking expert advice at the right time can prevent businesses from getting their fingers burnt financially.”

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Latimer Hinks law firm has a team of more than 50 people serving private and corporate clients.
Their range of expertise and services covers legal issues for private and commercial clients and include - commercial and residential property, wills and lasting powers of attorney, trusts, probate, long-term care, tax planning, commercial law, alternative energy negotiation, property and disputes, business rescue and debt recovery, family law, divorce, pensions, employment, and land-owning etc