Am I ready to start reducing the amount people owe me?

One of the greatest curses of being in business is having customers/clients not paying what they owe.

When it comes to taking on new business, the best solution is not to give credit until it has traded with you for, say, 6 months. In the first period you issue pro forma invoices which have to be paid before any supply is made. Once payment is received, you then issue a full VAT invoice at the same time as supply.

Another trick when taking on new business is to make them fill out a form to apply for credit. This form can collect all the information you need such as company registration number, trading address etc. The procedure for applying for credit shows you take the giving of credit seriously.

There are many credit reference agencies which will give you an idea of how much credit you should extend to the new customer. Another step is to go on the Companies House website. This is free or get your accountant to look it up since they will be able to review the information filed and advise you.

However much work you put into this, you can still get caught. What to do then? Well the next step is to chase. If possible get someone other than yourself to do this. They will be less emotionally involved! The chasing should be done on the telephone. The object is to get a promise to pay a certain amount on a certain date. You then wait. If the payment is not forthcoming you call again to ask why they broke their promise. Try to make them feel guilty and get a fresh promise but warn that if they break this promise then the matter will be passed to your lawyers.

Throughout this procedure put any further business with them on “stop.”

If all fails decide if it is worth “going legal.”

If you want to discuss any problems with us, just give us a ring.