7 TOP TIPS
on How to Avoid Getting Bad Debts Andrew Athineos, Managing Director of Athena Collections, a hybrid Receivables Management and Debt Collection Agency provides some insight and top tips for avoiding debts during this period of ongoing uncertainty.
L
ong before restrictions were imposed in the UK in response to the coronavirus pandemic, the economic climate was suffering. Now after numerous lockdowns coupled with post-Brexit uncertainty, the true knock-on effect is still unknown in terms of what the final impact will be for the future of the UK economy. In many ways, this appears to be the calm before the storm in an economic sense; however, any sane person could hardly call it “calm”. We are facing exceptional times and we are often asked whether it is appropriate or even inconsiderate for a business to ask for payment of their debts at this time. TIME TO ASK In short, it’s never inappropriate or inconsiderate to ask for payment for goods or services already provided. Due consideration should of course be given and, assuming the customer keeps lines of communication open, both parties should try to work through this together. Repaying debts in full and on time at the moment may seem like a pipe dream, but it’s imperative that companies have multiple layers of processes in place to ensure that any non or late payment is caught early to ensure open and effective dialogue can commence. Businesses should not be discouraged from asking for what is rightfully theirs. It is inevitable that thousands of businesses will face insolvency during this time and with that debts may increase, causing a domino effect. Action needs to be taken at an early stage to ensure you’re at the front of the queue. 60
LANCASHIRE & NORTH WEST MAGAZINE
HERE ARE OUR SEVEN TOP TIPS ON HOW TO AVOID GETTING BAD DEBTS
1 2
ENSURE INVOICES GO OUT ON TIME Don’t leave invoices a second longer than their due date. Consider bringing in your payment terms, keeping in mind the impact this could have on your customer.
FOLLOW UP At least seven days before the invoice is due, contact the client to ensure it has been received and there are no queries; also try to get your customer to commit to a payment date. You don’t want to miss the monthly payment run and find out that you’ll have to wait another month to be paid, putting your cashflow under pressure. Remember, it is your payment terms they agreed to when entering a contract with you!
3
NEVER ASSUME FULL PAYMENT While your invoice should always be paid in full, you should never assume that it will be. Find out early (see point two) what your client’s intentions are. If they can’t pay in full, agree written payment terms. This does two things: first, it provides admission in writing, and secondly it confirms the agreement so there is no ambiguity if later down the line a default occurs.
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