Shield your business from bad debt
Here are a few helpful ways in which you can shield your business from bad debt:
- Don’t put ‘all your eggs in one basket’
If you’re careful not to do this then debt from one customer should not mean the collapse of your business. - Know your Customers
Will the customer be able to pay their bill? Carrying out credit checks is vitally important and credit limits should be set for each customer. You can purchase credit reports from www.ykcreditcheck.co.uk. - Consider Different Payment Terms
Cash on delivery, staged payments, discounts for prompt payment are all options you may want to explore. - Utilise the Legislation
Remember you may well be able to add Interest and Collection costs to the debt – find out more… - Keep a Tab on things
Is there a reason the customer hasn’t paid? Have you got a procedure in place for flagging up unpaid invoices? - Talk to your Bank and HM Revenues & Customs
Are you able to get access to increased borrowing or take advantage of invoice discounting or Factoring Services? Remember to tell HM Revenues & Customs if your customer folds as you should be able to reclaim VAT and may even be able to arrange deferral of VAT and PAYE.
Have you also read our 12-Step Collection Process article?
