Things aren’t looking good. We hear on the news every day about the credit crunch, rising inflation and economic growth stalling. Most commentators are saying that things will get worse and stay bad for some time before they get better.
All this will inevitably mean that pressure will be put on cash flow. Your clients will be slower to pay (because of their own cash-flow problems), more bad debts are likely to occur and the bank is likely to be less happy about extending your overdraft.
We are finding that the economic downturn is even causing conflict between different departments in our clients’ businesses. Sales teams are finding it harder to get orders and so want to relax procedures, maybe by offering longer credit terms or undertaking less stringent checks on credit worthiness. Finance departments, on the other hand, are trying to tighten up credit control procedures and reduce the amount of overall credit given and exposure to the risk of bad debts generally.
It’s never good to have a business pulling in two directions and so it is important to make decisions on credit control policy in an open and balanced way.
Obviously, just how strict you are with credit control is a business decision and needs to be balanced with your need for sales, but now is the time (before things get worse) to review your credit control procedures - before you end up with problems.
Read the full article The zero tolerance approach to bad debt which outlines 7 crucial steps you can take to avoid bad debt and to tackle debt problems when they occur.
Our Dispute Management Solicitor, Gary Cousins, can help by working with you to set up an effective credit control procedure. We can draft your terms and conditions so that they maximise your chances of getting paid - in full and on time. We can advise on whether to take court proceedings and, if so, the best procedure to use and will then fight your corner in court to give you the best possible chance of making a full recovery of the debt. Book an initial free telephone appointment with Gary Cousins here or call 0121 778 3212.