How Should My Company Recover Its Debts?
An estimated £5.8bn was written off by Small and Medium Enterprises in the last financial year. The reasons given for the write-offs included:
- not wanting to ruin customer relationships.
- being unclear about the proper channels for pursuing payment of money owed.
Recovering your company’s debts is vital to the sustainability of your business – over time, these debts can add up. There are several ways to ensure payments are made.
Proactive early stages of debt recovery
Customer relationships are not always damaged when recovering debts from debtors. Terms and Conditions should be agreed between the parties at the outset of the working relationship, with signed copies being retained by both sides. The terms should clearly state the agreed payment terms and the consequences of late payment, including but not limited to:
- the suspension of credit terms and/or supplies.
- recovery of statutory costs and late payment interest.
- possible legal action.
Correct procedures should be in place for each transaction. These should include:
- a purchase order for every sale.
- issuing invoices on a prompt and timely basis.
Each Invoice should state the purchase order it relates to, the relevant payment terms and the method of acceptable payment.
Cashflow is the lifeblood of all successful businesses. All businesses should be proactive in collecting debts using good, positive credit control housekeeping by:
- sending payment reminders and chasing by telephone and/or email.
- keeping a full record of conversations.
This can help to highlight any customer issues or queries concerning the outstanding invoices and reduce the likelihood of late payment.
Collecting overdue debts
At some stage, every business will come across late and bad payers. Chasing overdue debts requires commitment; it is all too easy to get on with the day-to-day running of the business and overlook the late and bad payers. Proper procedures should be in place to highlight late and bad payers and to enable prompt action in the process of recovering the payment of an unpaid debt. The approach and tone of what steps are taken to recover the outstanding payments will almost certainly be influenced by the client relationship and the size of the debt.
At Beeston Shenton, we always base every collection on its own merits and always give concise, proactive and practical advice on how you should look to proceed with recovering from a bad debt.
We specialise in B2B recoveries and ensure that a positive outcome can be achieved in collecting debts – most debts we help with are either paid in full or payment plans are agreed upon, sometimes without the need for any formal legal action being taken.
We give full comprehensive advice and assistance in taking formal recovery steps where outstanding debts remain unpaid. Such steps can include:
- Court proceedings.
- Enforcement of Court Judgments.
- Insolvency Proceedings such as Statutory Demands, Winding Up and Bankruptcy Petitions.
You should only write off debt when you are sure that there is no prospect of collection, ie that your customer is insolvent. Acting promptly and quickly can increase the collection rate and reduce your risk of bad debt.
How Beeston Shenton Can Help
We have a wealth of knowledge and expertise in debt recovery steps to aid your business. We provide a considered approach to speed up debt recovery collections, whilst minimising customer conflict and reducing the risk to your business. Our service is tailored to match the individual needs of your business and pride ourselves in offering bespoke, cost-effective solutions to your debt recovery needs – from simply chasing late payers to legal proceedings including all county court and insolvency processes. We are dedicated to helping our clients improve cash flow and increase the profitability of their businesses and we use the latest in Debt Recovery software enabling us to process both prelegal and legal collections promptly and efficiently.
Contact us for a free consultation
If you need any advice or further information regarding this article, please contact us. As discussed above we offer a free initial consultation and if clients have a viable claim, we offer a variety of retainer options including no win – no fee arrangements. Every case or potential case will be assessed, on its own merits.
If you have found this article interesting and would like to learn more about how Beeston Shenton can help you please feel free to contact the writer, Iain Bould, at iain.bould@beestonshenton.co.uk or via the contact page on the website.
