InsightsInsight - Debt Recovery - POSTED: February 18 2019
How best to protect your business against insolvent debtors
Insolvency statistics for 2018 record that, for the first time since 2014, the number of people going bankrupt increased.
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Also, the number of companies entering some form of formal insolvency arrangement increased for the fourth year in a row, with compulsory liquidations up for the third consecutive year.
But how can you best protect your business against these ever increasing insolvencies?
One way will be to establish and maintain a credit control procedure that works for your business. Your credit control procedure should be able to:-
- Highlight troublesome accounts which may require further work. Once those accounts are highlighted you may be able to undertake further investigations on those customers e.g. try and establish their likely asset base, before deciding on the best course of action to recover your money.
- Your credit control procedures may not only include letters, emails and phone calls to seek payment of an invoice but also establish contact just prior to an invoice being due to check it has been received and whether there are any issues.
- Build a rapport with your customer base to establish if you can assist a customer which, may, in turn, lead to further orders and business opportunities.
- Where you can add interest pursuant to statute or contract do so. If you don’t have a contract which includes payment of interest and/or recovery fees on unpaid invoices then ask a professional to draft new terms and conditions.
- Make sure your terms and conditions are incorporated into your agreements by bringing their existence to the customer’s attention on all pre-contract documents.
Allied to a robust credit control procedure you should also undertake and maintain credit checks on your customer base which should also flag up potential troublesome accounts.
We at Brachers can partner with your business and advise on the whole myriad of your credit and finance needs from drafting robust terms and conditions to advising you on your credit control procedures through to assisting you with your debt collection and enforcement options. Please do contact me for an informal chat on how we can best assist you.
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