Tips to minimise bad debts

It’s a fact of life that some individuals and companies just don’t like paying their bills.

The longer a debt remains unpaid, the more difficult it can be to collect. Bad debts can have disastrous consequences and can be one of the main reasons that a business fails.

Good practice when taking on a new customer can save time and money (and fall outs) in the long run. Tips to minimise the headaches overdue debts can bring:

• Know your customer. Have you (or someone you know) used them before?
• Set appropriate credit limits
• Assess credit worthiness
• Set clear terms of payment. Make sure these are easy to see. Review these for persistent and repeat offenders!
• Don’t be afraid to put a customer on ‘stop’ who doesn’t pay you
• Invoice the correct legal entity – it sounds daft but some customers aren’t sure who to invoice and where to send them!
• Chase the payment as soon as it becomes overdue. Ideally make contact initially by phone. The sooner you chase it, the more likely it will be paid
• Deal with issues quickly. Have they raised a dispute? The quicker issues are resolved, the quicker you may get paid
• If you threaten legal action, follow up on it or you may be in danger of losing credibility
• Instruct a professional for assistance