The news is full of the economic downturn and the ongoing debate is whether or not we are in recession. The truth for the average person is that food and fuel now costs more and this means that there is less money left at the end of the month. In an affluent area, such as ours, many people have lived beyond their means and without readily available credit or the ability to remortgage, their levels of debt are increasing.
The owners of SMEs may also be experiencing the squeeze of the current economic climate, making the collection of outstanding debts all the more vital. The movement of money in and out of a business, cash flow, needs to be managed. In order to manage their own cash resources customers may delay payment. However, late payment may escalate to become bad debt. If cash flow is not monitored and action taken when necessary, a business can quickly find itself in trouble.
The quicker money can be collected, the faster that money can be recycled into the business and further profits generated. There are a number of measures that can be taken to reduce the occurrence of bad debt, such as credit checks for new customers and a visit to their premises before extending credit.
Despite taking precautions, bad debts do arise.
If you own a business that is owed money, there should be no guilt associated with the collection of that money. If money is owed for goods or services the law is designed to protect you. The success of your business may depend on your ability to collect overdue accounts and therefore the collection process must begin as soon as the sale is made. Make sure that your terms of business are clearly set out and that you invoice your clients promptly. Always communicate, verbally where possible, when an amount becomes due. Remember, if you are not getting paid then someone else is. If payment is not forthcoming, do not get emotionally involved, rather task a third party with collecting the debt.
If you want to get results, then be serious from the start. Send a letter from a solicitor stating the amount owed and the consequences to the individual if this amount remains unpaid. Do not be overcautious about debt and be prepared to follow the process through to its conclusion.
At Farnfield and Nicholls we provide the opportunity to set the process in motion to recover your debts, without any initial financial outlay, by offering a free solicitor’s seven day letter.
