Chasing late payments in times of uncertainty

Debt chasing letters

If communication with the company has failed and you have yet to be paid, you could start to send debt chasing letters. These can either be written by yourself or you could have them professionally sent for you.

Debt recovery and the legal route

If debt chasing letters still receive no response from your customer, it may be time to go down a more serious route. Getting debt recovery or legal firms involved can be costly, so it may be worth finding out how much it would be to get your money back vs the cost of the actual debt.

We advise you start with a debt recovery firm as it is the most cost effective option. Many debt recovery firms work on a no win no fee basis and it can often be quicker to receive your money compared to going through the courts.

If a debt recovery firm still doesn’t work for you, taking a company to court could be your last resort. It is worth keeping in mind that depending on the hours spent on your case costly solicitor fees could mount and there is still no guarantee you will get your money back.

Chasing your payment – don’t get left behind

Set future precautions in place

Getting hit by a late payment can be damaging for a company, especially if they aren’t expecting it. Setting due diligence in place, like consistently monitoring a customer’s credit score throughout the duration of your business relationship can help you reduce your chances of being stung. It’s also important to remember, just because a company has a good credit score one month, it doesn’t mean that will be the case going forward. After all a business’s circumstances can quickly change in this day and age.

Embrace technology

Technology can help businesses to build a 360-degree view of their debtors. Modern online business information systems like Creditsafe’s can allow companies to check all the financials, payment habits and payment trends of the businesses they deal with at the click of a button.

In times of tighter economic conditions, being ahead of the game on your customers’ payment habits and key financials is crucial. Having the correct systems and processes in place empowers your business to forecast your cash flow and be prepared for when their payments will reach your business, allowing you to focus more of your time on driving growth.

Rachel Mainwaring is operations director at Creditsafe

Reputation counts for a great deal in the business world, so it’s perhaps surprising that research has found 78 per cent of British businesses have paid suppliers late.

Image: Shutterstock

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