Should You Review Your Credit Control Regime?

Collecting outstanding payments on commercial invoices quickly is vital for a healthy cash flow.
Mon 31st Jul 2023

With the economy showing little growth and costs still rising, making sure you receive payment from your customers has never been more important.

SA Law’s Debt Recovery team has compiled ten tips to help businesses control debts and collect payments more easily.

1. Start at the beginning with robust terms and conditions, and staff training

Your terms and conditions need to work for your business and support your debt collection process. Make sure that your sales and credit management teams understand them and know how to incorporate them in your sales process. Having the best terms in the world is of no use if they don’t form part of your sales contracts.

2. Know your customers

Develop thorough account opening procedures and credit checks that identify your customers, so you know exactly who you’re trading with and what their financial standing is. Get trade references and consider directors’ or parent company guarantees for those who look weak. Also, ask yourself whether the person signing your account application form really does have authority to sign it. Check if there’s any doubt.

3. Invoice on time and diarise due dates

This may seem obvious but it is often overlooked.

4. Chase debts in order of date not size

The big debts will always be a worry, but the small ones all add up. The longer a debt goes unchallenged, the harder it can be to collect.

5. Use trained credit control staff

A consistent approach from confident staff speaks volumes and stops debtors getting the upper hand.

6. Keep proper notes of calls

Having notes that can be referred to in subsequent conversations stops debtors giving you the run around and can be invaluable in court proceedings. Send a follow-up email to debtors after calls to confirm what they have told you.

7. Document any payment plans in writing

Consider using an accelerator clause that makes the whole balance due if an instalment is missed. Any agreement to accept installments, or a later payment date, should be recorded in writing and must comply with any variation clause in your terms of business. For example, if they say variations must be in writing and signed by a director, a director will have to sign-off any payment plan.

8. Charge interest

If you don’t have an express contractual right to charge interest, a qualifying B2B contract will include an implied term that entitles you to 8% p.a. over base rate together with compensation and reasonable recovery fees. There will always be commercial considerations to take into account with key customers, but in many cases your customers will be charging their debtors interest, so why shouldn’t you?

9. Sift the ‘can’t pays’ from the ‘won’t pays’

Concentrate on the ‘won’t pays’ rather than wasting time on dead end cases. If a debt really can’t be recovered write it off and get the VAT back.

10. Keep your promises

In our experience the creditors who shout loudest get paid soonest, so hold customers to your terms and, if you tell your customer you are going to take further action, follow through on your promise.

SA Law offers a fixed fee debt recovery service, as well as help and advice for the recovery of commercial debts and the enforcement of judgments.  

Get in touch with SA Law's debt recovery advisors

If you would like more information or advice about recovering commercial debts, please do not hesitate to contact Anna Billy on 01727 798053 or Simon Walsh on 01727 798085.

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Every care is taken in the preparation of our articles. However, no responsibility can be accepted to any person who acts on the basis of information contained in them alone. You are recommended to obtain specific advice in respect of individual cases.