Credit Control – Getting in the cash (cheque or direct debit…..)

Here are some hints and tips for credit control and collecting the sums owed to you. 

Get it right from the start. Know exactly who you are dealing with.  Partnership, sole trader, limited company? Ask new (and existing) customers to complete a credit application form as part of the signing up process. If they don’t pay you need to know whom to chase. Check they are solvent! Take a deposit or ask them to set up a monthly direct debit from the start.

Terms and conditions. Set terms and conditions and stick to them. Payment terms – 30 days? Retention of title over goods supplied. Credit limits. Charging interest. Time to raise disputes. Payment on completion of service or supply of goods etc. This can be a legal minefield, we would strongly recommend that you consult a solicitor.

Systems and procedures. Set up a procedure and stick to it. Make sure all staff are aware of the procedures and follow them. Send invoices out as soon as possible.  Follow up with a statement or gentle reminder at the end of the month. If your payment terms are 30 days start chasing the outstanding debt on day 31. Get tough – do not let them get away with it, it is your money. Resolve any disputes as soon as possible.

Court Action. If all else fails commence court action. Send a final warning letter following the pre action protocol. Follow it through, do not make empty threats. The court system is relatively simple. For small debts, you can do it yourself online. If the debt is large or not straightforward please consult a solicitor. Your costs and interest are recoverable from the customer.

Interest. If you do not have the right to charge contractual interest under your terms and conditions (see above) you can still charge interest under the Late Payment of Commercial Debts (Interest) Act 1998. This only applies in business to business transactions. The rate is 8% above base and you can charge compensation for late payment of the debt.

Spotting problems. Bouncing cheques, payments on account,  a change in routine, excuses like the cheque is in the post…..

If you would like assistance with your credit control procedures or are struggling with slow paying customers, contact Carol Tindal on 01768 864466 or email carol@doddrescue.co.uk