Most small businesses now have a social media policy in place but new research finds that there...
Almost every business will experience late payment at some point. This practical checklist will help you recover the money you are owed.
- Set up a system to track outstanding invoices. Start chasing as soon as an invoice becomes due for payment. If no contractual payment period has been agreed, invoices must be paid within 30 days.
- Draw up a timetable, setting out what emails, letters, phone calls or other action you will take at each stage of chasing a debt.
- Investigate costs and decide whether to involve external help at any stage. Ensure that any debt collection agency you use is reputable.
- Keep a file for recording the date of each action, which individual you contacted, and the contents of any telephone conversations.
- Identify the correct contact, and issue a polite reminder letter as a simple first step.
- Follow up with professional but friendly telephone calls.
- Consider alternatives such as email reminders, or visiting the debtor in person.
- Discuss and tackle any problems which are preventing payment.
- Handle any excuses, and ask for a date when you can expect payment but be wary of delaying tactics.
- Use your judgement to decide whether to claim interest and debt recovery costs under the Late Payment of Commercial Debts (Interest) Act 1998, which was amended and supplemented by the Late Payment of Commercial Debts Regulations 2002.
- Follow up to make sure the customer is doing what has been promised.
- If the customer claims financial difficulties, attempt to negotiate a schedule of payments.
- Be prepared to stop further credit sales until you have been paid to put pressure on the customer and avoid further risk.
- If you cannot reach agreement, send a letter of claim warning of your intention to sue for the outstanding debt.
- Investigate whether it is worth taking legal action. Assess the customer’s ability to pay, and the likely time and costs involved.
- If you pursue the case, continue to attempt to negotiate an agreed settlement rather than going to court.
- Be prepared to take further legal action to enforce payment.