HMV,Jessops..difficult times for the High Street- make credit control a priority for your business.
The recent spectatcular high profile collapses on the high street show the importance of ensuring that debts and credit control remain a priority in 2013 because the ripples will come down the supply/business chain.
The Christmas shutdown is by definition a non-productive time of the year from the employer’s perspective. It is an expensive time of the year in terms of lost productivity and overheads which continue to accrue. It is also historically a difficult time to obtain payment of outstanding bills.
On the return to work in the New Year one of the first tasks must be deal with the outstanding debt that became due before or during the Christmas shutdown. If this is not dealt with it can put unnecessary strain on a business. Effective credit control and credit management is key.
If businesses are to successfully recover the funds they obviously need to have dealt with a business or customer that has the ability to pay. That regrettably in the current climate cannot be guaranteed. There are a number of stories about the high street, for example, which make alarming reading.
One of the most high profile collapses in recent years must be Woolworths. In addition you have had JJB Sports, Comet, Jessops and now most recently HMV. In the not too distant past anybody in business who had obtained a contract to supply these high street names would have been extremely satisfied with that day’s work.
Regrettably now nothing can be taken for granted. The simple fact has to be that no business should grant any more credit in total to all of its customers than it can afford to lose.
Businesses also need to monitor the accounts regularly and be prepared to ask and request payment. This is not a job for a Friday afternoon delegated to the office tea boy or girl (if they still exist) when they have a moment to do it. This is a proper job which is vital to the survival of a business. It demands the right sort of person. Someone who is skilled at talking, can relate to people and can think on their feet. This is not a job for somebody who is afraid of the phone as happened with one of my now insolvent clients – that certainly hastened their demise.
Businesses should also be prepared to send out letters or emails reminding customers about the outstanding debt and stating what the outstanding debt is. They should be prepared to deal with any questions or queries swiftly and efficiently when they arise. This will provide a paper trail which will assist in recovery of the outstanding sums.
Ultimately if the matter is to proceed to court appropriately experienced representation or advice should be obtained.
Mark can be contacted on 0785 2616335. Mark has been recommended in the Legal 500 national directory 2008 to 2012 for his work in commercial litigation, debt recovery and insolvency matters.