You’ve heard the saying, ‘prevention is better than cure’? It might sound like a cliché but it really is the key when it comes to making sure you get money for the work you do, or the service or product that you provide.
Taking preventative measures for your business can save you time and money in the long run.
Here are my top five tips on how to spread risk and maximise the chances of recovery for your business:
1. You must have terms and conditions of business in place setting out details surrounding default of payments, interest that you will claim if payment is not made, together with contractual legal costs. These need to be communicated to the other side at the outset of any contract being entered into.
2. Make sure you have got a robust internal credit control system. If your invoices are outstanding and are over terms – chase! Remember this is your money and payment is now needed. Do not be embarrassed about asking for payment.
3. If you feel the company you are going to deal with does not have a great credit history – ask for a deposit or a personal guarantee. The word here is protection.
4. Always undertake a full company search, credit checking against the company and its directors. At Companies House your search will reveal the debtor’s insolvency status.
5. Act quickly. In my opinion, timing is key. I would recommend taking prompt action to obtain a judgment and then to enforce it if payment is still not made.
Too many businesses waste time chasing unpaid invoices or give up altogether, but it is possible to recover the money that you are owed, maintain a healthy cash flow and protect your profits.