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New Year, Old Debts?

05 Jan 2017

The start of a new year is an exciting time for any business but starting afresh and looking forward can be tricky if you are still in the process of trying to recover old debts. Here are our top tips for making the process as smooth and as effective as possible:

  • Before contracting, know exactly who you are contracting with – company, consumer, partnership or sole trader?
  • Set appropriate credit limits (and stick to them!) but review them regularly and monitor payment histories closely – you want to be first in the queue if things go wrong!
  • Make sure new customers are aware of (and acknowledge) your credit terms so that there is no confusion from the start.
  • Monitor any ‘battle of the forms’ situations carefully – ensure your terms are not overridden by the other party’s.
  • Take time to put in place suitably drafted terms and conditions – not only do they make managing the relationship easier, they also bring many benefits when later trying to recover.
  • Know what you’re entitled to! Businesses are entitled to add interest to commercial debts (i.e. where both parties trading in the course of a business) that are overdue.
  • Record your attempts to communicate. Keep all relevant e-mails. If communications are by telephone, keep a record of what was said, when and by whom.
Past due – debt recovery – bought
  • All outstanding invoices over 30 days have an immediate impact on your monthly cashflow – after 30 days communicate with the debtor regularly and maintain that contact until the matter is resolved.
  • Bear in mind solutions like instalments or re-negotiation of other contracts to recoup your loss – a slower recovery is always better than a non-existent recovery!
  • Always keep the commercial situation in mind – relationships are important to every business and how you deal with debts can make or break your ties with suppliers, customers and contacts.
For further information, please contact Lucy Gray, Partner in our Debt Recovery team.
Call: 0191 232 8345
Email: Lucy.Gray@hay-kilner.co.uk