Business credit & debt management advice

Debt collection supportWeathering the perfect storm of the cost of living crisis, where customers are spending less and higher energy prices are making a real financial impact, could mean your business is heading into choppy waters. And according to research by global start-up funding network Fundsquire, 60% of small businesses fail within the first three years. But the good news is that stringent business practice can ensure your company’s name is not on that list.

Cash flow is the lifeblood of any business – without it, a company can’t pay its bills, invest in new stock/products or hire new employees to support growth. This is starkly highlighted by a survey by business analytics platform CB Insights, which revealed that the top cause of start-up failure (38%) was running out of cash or failing to raise new capital.

Small business financesCredit control tips

That’s why credit control is more important than ever. It’s one of the primary ways businesses make certain they have enough cash to run their operations, the process of monitoring and managing a company’s accounts receivable, i.e. the invoices it has issued to customers but hasn’t yet been paid for. By closely monitoring these accounts and acting when payments are late or delinquent, businesses can keep a healthy cash flow and head off financial problems.

Some effective ways you can improve your own company’s overall credit control policies and procedures include:

  • Create a clear payment timetable – if your payment terms are 28 days, politely remind your customer/client when the order is fulfilled and invoiced for. Follow up with another ‘nudge’ on the day the invoice becomes overdue, and then subsequent reminders every seven days.
  • Research customer credit management – doing this before you supply goods/services is a good tactic. Gather all the key information, such as full trading name and registration number, and simply run a credit risk check through the many online services available.
  • Optimise your payment processes – offer as many ways for customers to pay as possible, such as BACs, credit/debit card, cash or online payment portals. Making it easier should greatly increase the number of invoices paid on time. There are also many digital tools that can help: automating your credit control emails, for example.

Small business debt collectionTime’s up: when to take legal action

However, if a client does not show any sign of settling an overdue invoice after a specific period – you could have that set at three months, for example – it could be time to call in the professionals.

As a member of the Guild of Master Craftsmen, you may want to consider contacting Guild partner Jennifer Lambden at Omega Paralegal Advice Limited. A debt recovery specialist, Jen offers full debt support, Guild members enjoy reduced fees and all cases are no win – no fee.

‘Within debt recovery we can utilise the Late Payment of Commercial Debts (Interest) Act 1998 and this can be offset against the amount of the fee that is payable to us,’ Jennifer explains. ‘We do not request payment until the debt is collected, with the exception of any court fees payable. We request these be paid at the time the paperwork for court is completed. The fees are fixed by the court and in many cases can be claimed back by the creditor.’

Successful cases include recently the full recovery of invoices for a  company, all over 12 months beyond terms, totalling £88,000, and taking legal action on behalf of a client to issue a CCJ (county court judgement) against a debtor. To date, 85% of the debt has been paid, with further action pending.

Many times, Jen says, just one official legal letter sent from the debt collection company is enough to get the debt settled. If not, further steps will be taken to recover it. An example of this is following up with calls to establish why a debtor might be refusing to pay. This was the case in a recent action where a client tried to claim they were not happy with a website design. Luckily, the client had proof, in the form of emails, that this wasn’t true. And ten days after the first call from Omega Paralegal Advice Limited, the full outstanding balance, plus interest and compensation, appeared in the client’s bank account.

And Jen offers these final reassuring words if you’re worried about being kept fully up abreast of the process: ‘We never forget that the debt is our clients, and we advise them of the options available to them. This allows them to feel in control and to find the most cost-effective solution for them.’

To speak to Jen about any credit or debt support you need you can contact her through the members portal here:

Guild Member area

Or contact the Guid office on:

01273 478449