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Our top 10 tips for avoiding bad debtors

avoiding bad debtors

Ten top tips to help your business with avoiding bad debtors

Despite the assurances of an improving economy, many businesses are still vulnerable in the chase for new business. Small businesses especially are vulnerable to slow-paying or non paying large clients.

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Having overseen the collection of millions and millions of pounds of commercial debt, we have compiled a top 10 list of the most basic and easiest ways to prevent a business accruing bad debtors.

Top 10 tips

  1. Credit check all potential customers
    It is the most basic prerequisite for any new customer requiring a credit facility. Amazingly, some Business owners still do not credit check, preferring to accept flimsy trade references and operating goodwill.
  2. Bespoke Terms and conditions
    Professionally drafted terms and conditions will protect you and your business. They will define your business model, protect your rights and limit your liabilities.
  3. Payment Terms
    From outset, clearly state what your terms are for payment. Adopting this simple practice will ensure your customer knows the position.
  4. Invoice on time
    Send invoices as soon as possible. Failure to do so will result in confusion and will significantly increase late payment. Ensure the invoice is correctly addressed and for the attention of the right person. You also need to clearly state when payment of the invoice is due.
  5. Clear communication
    Maintaining constant communication with your customers is key to the smooth running of your cash flow. Follow up invoices with a courtesy call to confirm receipt and use this call to prompt payment of any outstanding invoices.
  6. The organisation of documentation
    Maintain accurate records and have an efficient filing system for all documents. Simple credit control procedures will help you to stay on top of unpaid invoices.
  7. Financial monitoring
    As an extra precaution, you wish to credit check your customers every six months to monitor their financial situation. As well as safeguarding for new customers, this is an effective measure for existing customers also.
  8. Ask for payment
    If a customer is not paying on time, do not be shy or hesitant about asking for payment. No business can survive without cash flow!
  9. Ways to pay
    The days of ‘cash only’ or the use of cheques are long gone. Utilise all modern methods to allow your customer the option in which to pay. Put your bank details on all invoices also.
  10. Take action
    If a customer does not pay and fails to adhere to subsequent requests for payment, do not be afraid to instruct a third party to recover your debt. Business is Business!

It is also worth pointing out that a simple clause in your terms and conditions can help avoid late/non-payment. Advise that in the event of non-payment, you reserve the right to instruct a Debt Collection Agency and/or Solicitors and they may be liable for recovery and/or legal costs.

Remember, prevention is always better than a cure however in the event of bad debts, please contact our New Business Team on 0844 875 4022 who will provide a free and frank assessment of your situation.

Author: MCS

Avoiding Bad Debtors | Get Expert Help From Debt Collectors Now

If you need help with a Debt, our friendly team of Debt Collection Experts is happy to help you today,

SPEAK TO A DEBT COLLECTION EXPERT