News: Oxley & Coward offer advice on bad debt
Rotherham's Oxley & Coward solicitors have put together a number of tips to help small, owner-managed businesses keep the cash flow flowing.
While the supplier-business is trying to get its invoices paid as quickly as possible, the customer is trying to pay as late as possible - a state of tension that leaves many businesses worrying how to make sure invoices are paid promptly but at the same time retaining its customers by keeping them on side.
Amy Cusworth, commercial law solicitor at Oxley & Coward Solicitors LLP advises: "It comes down to making sure that problems don't arise. This means clear, fair and reasonable terms of business and taking care to make sure that the customer knows them.
"The customer must also be clear about the price and if the charge or fee is based on time, the supplier must keep customers informed of time spent and reminded of what that means in terms of cash. It's worth looking at interim billing as well, as it helps both the supplier's cash flow and avoids a large debt building up for the customer."
Other top tips from Amy include:
- Invoices should be delivered promptly; an invoice delivered a month or more after the work is completed or the goods supplied can simply cause irritation
- The invoice should state when it is due for payment: the customer's accounts department cannot be expected to be familiar with the supplier's terms of business
- If the invoice is not paid on the due date, an efficient credit control system must kick in and must operate like clockwork. Credit control should not start with aggressive threats; too much aggression too early may undermine good relations with the customer and can be counter productive. Start with a gentle reminder before moving up through the gears
- If the invoice remains unpaid the creditor should not take any action without first running a credit control check on the debtor; there is no point in wasting time and money chasing someone who is insolvent
- If the debtor is solvent but is likely to defend the claim, the creditor should see a solicitor at this stage to discuss the options. These might include court action or mediation
- If the claim is simple and unlikely to be defended, a creditor might consider a do-it-yourself approach either in the traditional way through the small claims courts
- Finally, when chasing another business or a public sector body for payment, the creditor has a statutory right to interest and compensation, even if their terms of business say nothing.
"Credit control starts with clear, fair and reasonable terms of business that provide effective tools for enforcement," added Amy. "They are the foundation of good customer relations and should be given the priority they deserve, but they also need reviewing on a regular basis, as both business and the law change. An expert can ensure that they are unambiguous and will achieve the desired result."
Oxley & Coward website
Images: Oxley & Coward
While the supplier-business is trying to get its invoices paid as quickly as possible, the customer is trying to pay as late as possible - a state of tension that leaves many businesses worrying how to make sure invoices are paid promptly but at the same time retaining its customers by keeping them on side.
Amy Cusworth, commercial law solicitor at Oxley & Coward Solicitors LLP advises: "It comes down to making sure that problems don't arise. This means clear, fair and reasonable terms of business and taking care to make sure that the customer knows them.
"The customer must also be clear about the price and if the charge or fee is based on time, the supplier must keep customers informed of time spent and reminded of what that means in terms of cash. It's worth looking at interim billing as well, as it helps both the supplier's cash flow and avoids a large debt building up for the customer."Other top tips from Amy include:
- Invoices should be delivered promptly; an invoice delivered a month or more after the work is completed or the goods supplied can simply cause irritation
- The invoice should state when it is due for payment: the customer's accounts department cannot be expected to be familiar with the supplier's terms of business
- If the invoice is not paid on the due date, an efficient credit control system must kick in and must operate like clockwork. Credit control should not start with aggressive threats; too much aggression too early may undermine good relations with the customer and can be counter productive. Start with a gentle reminder before moving up through the gears
- If the invoice remains unpaid the creditor should not take any action without first running a credit control check on the debtor; there is no point in wasting time and money chasing someone who is insolvent
- If the debtor is solvent but is likely to defend the claim, the creditor should see a solicitor at this stage to discuss the options. These might include court action or mediation
- If the claim is simple and unlikely to be defended, a creditor might consider a do-it-yourself approach either in the traditional way through the small claims courts
- Finally, when chasing another business or a public sector body for payment, the creditor has a statutory right to interest and compensation, even if their terms of business say nothing.
"Credit control starts with clear, fair and reasonable terms of business that provide effective tools for enforcement," added Amy. "They are the foundation of good customer relations and should be given the priority they deserve, but they also need reviewing on a regular basis, as both business and the law change. An expert can ensure that they are unambiguous and will achieve the desired result."
Oxley & Coward website
Images: Oxley & Coward
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