4 essential tips for avoiding cash flow and bad debt problems
Are you credit checking all of your customers?
The majority of UK businesses will have in-house procedures for credit checking, however, it is not always your new customers that may be your biggest risk. If you took on a customer three years ago, who is to say that their circumstances have not changed? They may now have County Court judgements registered against them or have failed to submit their last set of accounts on time. It is worthwhile having a system which constantly updates fresh credit information.
You may have set these terms at the outset of your business but it may be worth changing needs to improve your cash flow. For example, if you originally set these at 30 days why not reduce them to 14 days to allow you to chase your outstanding invoices quicker.
Clear and concise invoices
To cut down on the amount of queries which is a costly exercise for any business, make sure you have clearly itemised individual goods and in the case of services that the hourly rate or commission is also clearly detailed
To give any third-party collection agency the best chance of recovering your outstanding debts, try and pass these on no later than 30 days after your invoice becomes overdue.