In order to prevent late payment issues arising in the first place, it's a good idea to perform credit checks on new customers. This could include checking whether a new customer has any court judgments outstanding against them and whether they are solvent. Ensure that every customer is issued with a tightly drawn agreement or Terms and conditions in which payment terms are clearly set out. Invoices should be issued in a timely manner and remember to keep an audit trail of credit-related documents, as records are crucial to effective debt collection.
Debt recovery is a major issue for many small businesses, particularly when margins are tight. Understanding how to deal with late payment of commercial debts and collecting money owed to you is a crucial part of effectively managing your business.
Prevention is always better than cure and following certain processes when dealing with a new customer can help ensure that your invoices are paid promptly. If you do have to chase up Invoices, a First payment reminder letter is a useful tool, as is the ability to charge interest for late payment. Occasionally, a Repayment agreement can provide a solution and there are other alternatives to court action, including mediation. Ultimately you may decide that legal action is necessary in which case you should understand how to issue a claim and possibly even make a statutory demand.