When dealing with key customers, some businesses can be reluctant to chase for timely payments. There may be a perception that the trading relationship is too valuable and could be harmed. But these hidden financial costs are eroding your profit. Recovering unpaid debts is an essential part of maintaining effective credit control and commercial professionalism, so you should be following up with your creditors when debts fall due and without delay.
To prevent bad debt issues escalating, make your late-payment penalties very clear and stay in close touch with late and slow payers. If your customers don’t hear from you the moment a payment is late, you could be at the back of the queue to get paid.
Putting in place clear contractual terms and conditions at the start can help to reduce the risk of bad debts. If you are supplying goods, for example, consider having a ‘retention of title clause’ so you retain ownership of the goods until they have fully paid for them. If they fail to pay on time, you may have the right to take back the goods and re-sell them, as long as the clause was drafted correctly and incorporated into the contract.
No matter what the business, we always go back to basics with our clients. We look at your credit management and cash collections processes to see how best we can help. Everything we do is backed by cost transparency, commercial sense and clear reporting. And whatever the concern, we can draw on expertise within our business to provide seamless advice beyond simply debt recovery.