Insolvency Lawyers and Help with Credit Risk Management
Whether you are a small business owner or manage a medium sized business, cash flow is important for the survival of the business. Lawyers and help regarding debt collection, proactive steps to prevent bad debt and management of credit extension go hand-in-hand.
Rather than waiting until the debt owed by one client is so much that it affects your ability to operate effectively, contact insolvency lawyers and obtain help in minimising your risks. Below are a few tips to help you manage the extension of credit to clients in a proactive manner to limit the risk of non-payment and bad debt.
Always Run Credit Checks
Don’t rely on the applicant to provide accurate information about their credit history and debt. Make approval of credit to clients, subject to them having good credit histories and obtain their consent to run credit checks. The credit scores and notifications of previous judgments should be warnings not to extend credit to the applicant.
Double Check Contact Information
Confirm to whom the invoices should be addressed and double check the client company’s payment policies. Send out invoices on specific dates and contact clients immediately when their payments are overdue. With such, late payments will be minimised and your risk of not receiving payments at all will be significantly reduced.
Diplomacy Pays
Make sure that the person that contacts customers with overdue accounts understands the art of diplomacy and good customer relations. That being said, the person should still be assertive enough to ensure that specific arrangements can be made for the outstanding payments to be made.
Resolve Disputes Promptly
If a customer doesn’t want to pay because of faulty work or goods not received in good order, you need to take prompt action to address the problem. Understand that the customer has the right to be upset about such, but at the same time, you need to correct problems to minimise the risk of the customer not paying at all.
Keep Track
Sloppy invoicing and monitoring of debt cause customers to pay late or not at all. It is your responsibility to set up a system to monitor accounts due and patterns of late payments.
Terms & Conditions
Get help from our lawyers in drafting the terms and conditions of credit provision to ensure that the wording is in clearly understandable language. Remind clients of your right to charge interest on late payments and your right to take legal steps where necessary for non-payment of their debt.