At this time of year, we see many suppliers contacting us about money they are owed from the Christmas period. For these companies, it seems the festive hangover has lasted longer than is reasonable!
The type of company most likely to be affected includes event caterers, drinks suppliers and venues who have provided their product or service but are still chasing payment.
It is always good practice to set the terms of your supply with customers. If you have supplied products to your customers – maybe you agreed a payment on account of say 50% or you may have agreed payment on delivery of the products. If you are a venue, it is always good business sense to receive a deposit upfront.
If you are struggling to get paid, the first step you should always take is to contact your customer by telephone, making a note of who you spoke to and what was said or agreed.
If the customer has not paid within the time set out in your terms, I would suggest that, subject to your telephone call with them, you allow a short period of time for them to make full payment – perhaps 7-10 days.
But remember this is your cash. You have supplied a product or service and now need to be paid. Managing relationships with customers can be sensitive but at the end of the day you have had to pay suppliers or staff to provide your product or service, so it is only reasonable that you should receive your payment. Be strong but fair.
If payment is still not forthcoming, your customer should be placed on ‘Stop’, so that no further business is done with them and recovery should be started ASAP.
If you wish further action to be taken to recover the monies due to you, a pre-action protocol (PAP) letter should be written immediately. The PAP allows limited companies 14 days to respond and individuals 30 days, so if you don’t act quickly, many weeks will pass with you no nearer to receiving your payment.
For example, if your invoice was dated 16 December 2019 and your terms were 14 days then your invoice was due for payment on the 30 December 2019. If you then contact the company by telephone and email them, we could now be at a date of 15 January 2020. If a PAP letter is to be written to a limited company at that time, this will expire on the 29 January 2020, some seven weeks after the date of your invoice. For an individual it is even worse as the PAP letter allows them 30 days which would expire on the 15 February 2020, some nine weeks after the date of your invoice.
Remember, a young debt is a collectable debt. The more time that passes, the harder it will be to recover the money that you are owed.
If you would like advice about recovering money that you are owed or would like me to write to customers on your behalf to demand payment, please get in touch by phoning 01782 205000 or emailing email@example.com