Cash flow plays an integral part to the smooth running of your business and customers who fail to pay your invoices on time or at all can have a significant impact on cash flow and the financial health of your business. The debt recovery process can be a costly and time-consuming exercise and in some cases, the costs may equal if not exceed the debt. It is therefore important to have a system in place to ensure that customer debt do not accrue.
Before you enter into a contract with your customer carry out a credit check. A credit check is a simple and effective way to assess the financial behaviour of your customer and whether they have a history of late payments. If a customer has a bad credit rating you can consider implementing measures to minimise the risk of non-payment.
Consider whether it is necessary to obtain personal guarantees from the directors of your corporate customers to secure the financial obligations of the company.
Obtain prepayments from your customers to ensure that you are paid in a timely manner and that you are guaranteed payment for part of your services.
Customer ‘Stop List’
To prevent customers from accruing further debt implement a ‘stop list’ which prevents persons within the organisation from providing further services to customers who are overdue on their payments.
Terms & Conditions
Ensure that you have robust terms and conditions in place which clearly set out the customer payment obligations and your rights in the event that the customer defaults on payment.
Should you require assistance with your debt recovery process please contact Pannone Corporate on 0800 131 9000.