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You've Done the Work - Now Get Paid

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You have a skill, a product or an idea. But how do you convert a full order book into cash?

Here at Chattertons we look to grow with our business clients to see them improve their overall financial prosperity and returns. Key to this is credit control and below we offer some tips that all businesses can learn from whether large, small, established or new-start.

Credit control is the process of controlling payments coming into your business. Without it you have serious cash-flow problems, have to raise prices and become less competitive. This could result in your business failing.

  • When does credit control start? Your customer has to know your credit terms from DAY ONE. The best way to do this is by presenting a set of bespoke terms and conditions of business prepared by a lawyer who knows you and your business. This will inform your customers, for example, how and when to pay and the consequences of not paying, such as the interest you will levy on late payments.
  • Know your customer: Sounds obvious but it is surprising how often we are instructed to recover debts with very little information to go on. It is essential to collect full and accurate name and contact details from your customers. If you are dealing B2B, find out if it is an individual, partnership or company. Don’t be afraid to ask. Check them out on the internet. Try the Companies House website if you are dealing with a limited company. This will give you information such as if the company is active or in, or at risk, of liquidation or some other process, if it is behind with its annual accounts and returns and so on. This is all free data and enables businesses to make informed decisions whether or not to go ahead or to do so on safer terms from a credit control perspective.
  • Director’s guarantees: Do not be afraid to ask for these as a means of doubling your chances of getting paid. These important documents should be drafted professionally to fully protect your business.
  • Time limits: Adapt these to your type of business.
  • 24 hours after you have supplied the goods or service, ring to check your customer is satisfied;
  • 48-72 hours later, issue your invoice;
  • 24 hours later ring to check the invoice has been received and is being processed for payment;
  • 30 days after invoice begin sending letters: the first gives 14 days and the second gives 7 days.  Politely but firmly asking for payment. The second letter escalates the urgency by referring to legal action. Now the invoice moves from what we sometimes call “pay when chased” to “pay when threatened”. There is no third letter;
  • At 60 days legal action is probably the only way forward. Don’t leave it any longer. At this stage you should be speaking to a member of our commercial debt recovery team which is part of the Dispute Resolution department. The sooner you do this the better the chances of a quick and successful debt recovery.
  • Keep in touch: If your customer promises to pay by a certain date, write to them to    confirm this; if the date passes without payment being received then ring them up straight away to find out what is going on. NEVER put this off. Chase the biggest debts first as those are the ones that will have the greatest impact on your business the longer they remain unpaid.
  • Possible solutions: Offer a small discount for early payment. Agree instalments. Spell out the consequences of their default, namely the suspension of your forbearance and the likelihood of a County Court claim.  Do your terms and conditions allow you to take back any goods not paid for?
  • The old excuses and what to say:
  • I seem to have lost your invoice: Ask if that is the only reason for non-payment? If not then it is a delaying tactic.
  • The cheque is in the post: Ask for details of the date of the cheque, its number and date of posting? If they cannot answer then it’s a lie.
  • The computer is down: Who is fixing it and when? How are the wages going to be paid?
  • We are waiting for a big customer to pay us and then we can pay you: Ask for the name of that big customer? If the money is definitely coming in then why can’t they get a bank loan on the strength of that certainty in order to pay you now?
  • Don’t overdo it: Section 40 of the Administration of Justice Act 1970 makes it an offence to harass a debtor “so as to cause alarm, distress or humiliation” so be careful. That should not be a problem with legitimate credit control.
  • The ultimate credit control tool: The ultimate form of credit control is full payment, up front; cash. If you can get it!


    Our services

    Chattertons handle bulk debt recovery and one-off debts. We can also review your terms of business, credit control procedures and train your staff to reduce bad debts and facilitate debt recovery. We can often work for you on a fixed fee basis.

    Andrew Morley provides dispute resolution, litigation and debt recovery services from our Lincoln office. To contact him please click here.