Debt recovery: reduce late payment of debts

If your business suffers from a high incidence of late or non-payment it may be time to re-consider your approach to chasing customers or clients.

A simple but effective means of reducing late and non-payment by customers is to ensure you have devised and put in place a formal procedure for invoicing, following-up invoices and chasing debtors that do not adhere to the invoice terms. Businesses that have an ad hoc or lax approach to invoicing and chasing debtors can encourage customers to develop bad habits or give the impression late payment is an accepted practice.

As the end of the invoice term draws close (often 30 days for many businesses) if you are still waiting for payment from a customer or client, send out a polite reminder that payment is due.

If payment is still not received follow it up with a phone call, ensuring you speak with a decision maker able to arrange payment or the person you originally dealt with at the organisation in relation to the order, instruction or purchase. As well as acting as a further reminder it also gives you the opportunity to identify whether there are any issues with the service or product delivered, allowing you the opportunity to resolve these at an early stage.

If payment is still not forthcoming, write to the customer or client noting your previous correspondence, conversations and the original payment terms. State a revised deadline for payment and explain that if payment is not received you will take further action, this could include:

• Instructing a debt recovery solicitor to recover the debt
• Refusing to supply further products or services
• Reclaiming any product provided (if appropriate and where a retention of title clause was in place)

Taking a small amount of time to implement a formal, standardised procedure will not only ensure all of your customers and clients are clear as to your terms of business and your expectations, it will also save you time and money by reducing the burden of having to chase payments on an ad hoc basis.

Debt recovery services

Holmes & Hills Solicitors has a large team of litigation solicitors that offers debt recovery services to businesses across East Anglia and the South East.