Debtors – we’ve all got a few of them! Customers owing money are becoming more common these days, especially in the current climate. A failure to manage your debtors can be damaging to your business. You’ve got to nip it in the bud, and make sure the debts don’t turn bad.
Here are a few tips on how to manage your debtors:
- Minimise disagreements by having clear and concise terms of trade. Sometimes a debtor refuses to pay a debt because there is a disagreement about things like what was to be provided, when it was to be provided, or perhaps even when a bill is to be paid.
- Document everything. Having a written record can go a long way towards clarifying any issues between you and your debtor, and can also help minimise disagreements.
- Where possible, get paid up front, or get paid on delivery of your goods. In the alternative, get a deposit. Sometimes, something is better than nothing.
- Trade with reliable and reputable businesses. If a customer wants to do business with you on credit, get trade references from them. You can also obtain credit checks from Veda or Dunn and Bradstreet.
- Secure your interest. If you sell goods on credit, you should consider whether it is appropriate to register your interest in the goods through the Personal Property Security Register.
- Have a regular follow up procedure with your debtors. Sometimes they plain darn forgot! You need to be front of mind, and you need to remind your debtors of the outstanding amounts. Where possible, you should get acknowledgements in writing that they will pay the debt by a certain date.
If all of the above does not work, then you may have to consider whether it makes commercial sense to take your debtor to court to attempt to recover the money that they owe to you. That being said, if you have a process in place, and plenty of records to support your case, you should have no trouble getting a court judgment in your favour.
We at Adams & Partners Lawyers can certainly help you with all of the above – whether it is drafting or reviewing your terms of trade, helping you put together a process to manage your debtors, or chasing them down in court if need be. If you need help with these matters, do not hesitate to contact us today.