Avoid Bad Debts – 8 tips for improving cashflow
These simple and easy to do steps can help save your firm major headaches in the future.
- Have a clear set of terms and conditions.
This looks professional and makes it considerably easier to chase debtors. Remember to include a clause stating that you continue to own the goods until they have been paid for and one requiring customers to draw your attention to any issues or problems immediately.
- Set credit limits.
Checking a prospect’s credit rating before supplying your product or service can avoid a lot of problems as does setting lower credit limits for new customers.
- Agree up-front what you will provide and when.
Require this to be confirmed in writing (e-mail or written letter are acceptable).
- Double check
Always double check if you need a purchase order number for your invoice and find out who it needs to go to (the buyer or accounts).
- Invoice promptly
Always invoice promptly including all the details needed for the customer (e.g. P.O., addresses, your bank details for payment, what was delivered etc.). It is worth finding out if the accounts department need the invoice by a certain date to make the weekly or monthly payment run.
- Deal with any disputes quickly.
Companies will not even look at paying you until any disputes have been resolved.
- Have, communicate and execute a clear credit control policy.
This should cover in detail the earlier steps and includes what happens if the payment is late. Your first step should always be to call the buyer to find out what is happening. Your policy must cover what to do if the response is a clear warning signal such as “We have a cashflow issue.”
- Know when to pass the account to a professional debt collection
If you do reach this stage then the Debt Recovery Bureau can professionally and efficiently collect all of your late business-to-business debts for free. Our costs are added onto your debtor’s invoice as covered by The Late Payment of Commercial Debts Regulations 2013.
Chasing late debts is frustrating and steals your valuable time. By giving DRB your debt book, you can relax knowing that your late and bad debts are being collected in a professional and efficient manner.
I hope you found this brief guide interesting. You can find out more on our web site at www.tdrb.co.uk.
Alternatively, if you would like to contact us call us on 0800 440 2359 or e-mail the team at email@example.com.
Remember: the sooner you pass your late debt book onto us the quicker you get paid while greatly reducing the chances of a debtor disappearing.
Call us today on 0800 440 2359 or visit our web site at www.tdrb.co.uk.