one of the key benefits from reading it is that you’ll get dozens of excellent…
Unfortunately during 2009 more businesses are likely to go to the wall. As they do, they will leave debts behind them and unsecured creditors will be lucky to recover anything from the fallout. So what would happen if it was one of your customers that went bust and how can you protect yourself against it happening.
Basic precautions to ensure you get paid
The following five steps should be undertaken by every business. Most of them are common sense, but it’s surprising how often they get overlooked!
- Maintain an open dialogue with your customers. Encourage them to talk to you about how their business is performing.
- Have clear credit control procedures in place. Use our cash collection system to help with this and stick vigourously to it!
- Credit reference new customers before offering credit terms
- Don’t fall foul of exceeding credit limits or credit terms for clients, unless absolutely necessary
- Ensure that you recheck clients credit ratings regularly. Monitor changes in their rating, especially downward trends. Contact us for ways to credit check clients
Speed up your payments process
One of the best boosts that you can give your cashflow management is to restrict payment terms on your invoices. The cash management system shows you how to communicate such changes to customers.
Check your terms of business
It’s always a good idea to keep an eye on the clauses you have in business contracts and review them on a regular basis. Some good terms to include are:
- Include retention of title clauses in contracts to increase your chances of getting unsold goods back in the event of a customer becoming insolvent.
- Obtain personal guarantees from directors for debts
- On substantial contracts, look into the possibility of obtaining insurance against a customers failure to pay (This is a costly measure, so should only be used for significant sums!)
You can’t guarantee that one of your customers won’t become insolvent over the coming months. By putting the above procedures in place you can reduce the chances of you losing out, if disaster strikes.
If you need any help in implementing any of these ideas, please contact us.