So you’re in business, and you sell stuff or provide a service, and people are going to pay you. Great!
However they don’t always pay you, and they don’t always pay you on time, so besides selling stuff you are now offering credit, and that’s not what you went into business to do!
So what are you going to do about it?
Well the smart advice is not to get into the situation in the first place. Here’s my top ten tips for debt recovery…
Rule 1 – NO credit
Or offer it only to those over 85 years of age accompanied by both parents.
Rule 2 – Have some rules
You know T&C’s Terms and Conditions. You should stipulate what your terms are – do you allow 30 days to pay? DON’T cobble them together from the internet and copy and paste from your suppliers T&C’s – they invariably won’t be right, appropriate and believe me it will be false economy. Get a solicitor to prepare a properly tailored set for you.
Rule 3 – Stick to the rules
What’s the point of having rules if you don’t stick to them? Make sure you stick to them. No hesitation, deviation or variation.
Rule 4 – Chase ‘em
That’s right chase your debts. At first not in a rude aggressive or surly manner, but in the first instance with a polite telephone call enquiring when your defaulting customer will be settling their bill. This flushes a lot of them out.
Rule 4b – Chase ‘em again
Don’t hesitate, don’t doubt yourself; pick up the phone and telephone and politely ask for the money to be paid to you – and enquire if there are any difficulties. If there are difficulties are you willing to accept a payment plan – say three instalments. – not brilliant, not great but better and cheaper than other options.
Rule 5 – You’ve chased…
So you’ve chased, you’ve chased again and you’ve been told the cheque is in the post, they’ve been on holiday, the dog has eaten their wallet or their mother in laws next door neighbour’s budgerigar has escaped and they have been too distraught deal with their affairs and keep your livelihood on track. Its time to get serious. Send 1 letter, and 1 letter only, Simply saying this:
The amount of £x in respect of our fees remains outstanding.
Unless the same is settled within 7 days, we will instruct our solicitors to issue court proceedings against you.
Rule 6 – Instruct the lawyers
Its bread and butter work to solicitors, and they will usually do you a single letter for around the £25.00 mark. This has the benefit of flushing them out in a lot of cases.
Rule 7 – Issue court proceedings
You can do this yourself, using the Court service web site or you can instruct the lawyer to do it. It’s pretty straightforward and the court fee will depend on the amount you are claiming. You also get the benefit of Statutory interest. That’s a fabulous 8% – better than any bank is offering.
Rule 8 – Use your diary
Stick to the dates set down by the court, and watch the calendar, if your debtor misses the date that their reply or defence is due. Ask the court to enter “judgment in default”. Hey presto you now have a court enforceable order confirming that you have the right to recover your debt, the court fee, and the fabulous 8% interest from your non paying customer (by this point you can be pretty sure they are no longer a customer of yours – but it has been known for customers to come back even after this)
Rule 9 – Enforce
That’s right enforce your judgment . There are several ways to do this. But by far the best way is to instruct a High Court Enforcement officer. These guys (you have seen some of them on the telly) have the right to enter property and seize goods. They are good and they are motivated by money – they get paid based on results.
Rule 10 – Avoid the scarecrow
Or to put it another way don’t deal with men or women of straw. Don’t chase money from people who haven’t got anything. You are wasting your time – before you have got here and before you are offering credit do some credit checks to ensure that they are going to be able to meet your fees.
PS. Know your customer
Are you dealing with an individual, a partnership, a limited company, who are the directors and where is the registered office. Too often when solicitors are asked to chase debts, it is apparent that the identity of the entity, who the debt is being chased against, is not known, no full name, no address, uncertainty as to whereabouts etc. Always take full details – address and land line telephone numbers. Business debts are different from personal debts and they are quite separate unless there are personal guarantees in place.