Brethertons LLP Solicitors Banner Image

News & Blogs

News and Events

Tips to avoid bad debts - Tip 4

  • Posted

In my last blog as part of a series of hints and tips on how to minimise bad debts and improve your cash flow, I discuss ‘Unpaid Invoices’. 

If a customer fails to pay and fails to keep you informed then ensure you have a policy for dealing with that. Stop supplying goods or services in the first instance. Hopefully that will encourage them to pay, particularly if they rely upon the goods or services you supply. If not then at least it prevents the debt from further increasing.

Consider raising an invoice for interest and late payment compensation to try and encourage your customer to make payment before the debt increases.

If it appears to be a temporary or one off problem keep in regular contact with the customer, this will improve your chances of being the first people paid when they are able.

However, do not allow matters to drag on for too long. You may want to be sympathetic to a customer in trouble but you must put your business first. If they cannot make payment in full try insisting upon instalment payments so at least your debt is reducing.

If your customer is offering instalments and you want to push for payment in full try to think commercially about their ability to pay. If they do not have the money it does not matter how insistent you are they just may not be able to pay you.

Resorting to legal action can take time and it might be quicker to agree payment over a few instalments. And of course, even if you take legal action, if they do not have the means to make payment you are likely to still have to accept instalment payments but have waited longer for them to start and incurred costs too.

Similarly if there is a dispute even you do not accept it you may want to consider offering a small reduction in your invoice in order to retain a customer and bring the matter to a swift conclusion. Although frustrating this again can be quicker and cheaper than pursuing the full amount.

If you do have to resort to legal action notify your customer in writing first that you are going to do so, this may be the push required to obtain payment. If not then consider instructing a firm of solicitors like Brethertons with a proven track record and who will provide clear details of all costs up front so there are no hidden surprises. Ensure you have all your paperwork in place so you can back up what you are claiming and refute any disputes raised for the first time at this stage.

Our Commercial Recoveries team will discuss with you the best route for recovering payment of your debt. This may involve commencing legal action through the county court or issuing insolvency proceedings depending on a number of factors.

For more advice or to instruct us in respect of a single or bulk debts please contact the Commercial Recoveries team today.