Yes, you guessed it. There are no magic solutions when it comes to dealing with bad payers. But the good news is that you can take certain steps to create a plan and strategy that will give your business the best possible chance of getting paid and thereby limiting the risks for your business.
So, what are your options?
Here are 10 practical self-help tips to avoid a bad debt:
- Do a free Companies House check on the Company House website
- Consider doing a credit reference check with agencies such as Credit Safe and Equifax. The report will usually list any county court judgments, financial results, registered lending and a recommended credit score
- Carry out research into the business background of the customer you are dealing with. For example, doing a Google or a Bing search
- Definitely check out their website and if it’s feasible and relevant, visit their offices or store. Ask yourself if it’s a good ‘feel’
- Ensure you have a signed contract with clearly defined terms and conditions and that your terms supersede any others (don’t fall prey to the battle of the forms!)
- Ask for written references on your customer from suppliers and banks
- Speak to other people who have dealt with the same customer
- Consider asking for a deposit payment upfront, staged payments or set a lower initial credit limit when dealing with a new customer
- Consider getting credit insurance as credit insurers may also do a credit check on your behalf as part of the policy cover. Further information on credit insurance providers can be found here
- For a small fee (£4 - £10) you can do a search of the official Register of County Court Judgments. Click here for more information
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Small businesses are owed on average £6,142 mostly by larger firms not paying them for goods and services on time. For more than 10 years we’ve been highlighting the impact of late payment, supply-chain bullying (suppliers are forced by larger firms to cut their prices), retrospective discounting (larger firms forcing a discount of an already agreed price) and paying-to-stay (smaller companies pay larger firms to remain a supplier).