The prompt payment of monies due to your business is self evidently vital : ensuring that this happens is not simply a matter of “chasing” late payers but more a case of managing the whole relationship with your customer.
We suggest that when you are first approached by a new customer find out who recommends them to you – the more intelligence you can glean about your prospect and his circumstances the better idea you may have as to his credit worthiness and whether you want to do business.
Before you do business consider:
• Taking trade references
• Running credit checks
• In the case of a small limited company request a director to sign a directors guarantee
• Agreeing a credit limit
• Ensuring that properly prepared terms and conditions are signed.
If the invoice is not promptly paid:-
• Telephone the customer to check that they are satisfied – and to clarify when payment will be made. Set up systems to ensure that this is chased up or reminder letters are sent.
• DO NOT WAIT AROUND!
Issue small claims court proceedings – or instruct us to assist. We can help with:-
• Sending a “solicitor’s letter” – we can agree competitive fees
• Issuing proceedings and enforcing judgments
• Bankruptcy/winding up proceedings
Remember that by virtue of the Section 69 County Courts Act 1984 a creditor may claim interest on outstanding debts at 8% (where there is no contractual interest entitlement) after proceedings have been issued. Entitlement to interest terminates on judgment for debts under £5,000.
Furthermore by virtue of the Late Payment of Commercial Debts (Interest) Act 1998 : where goods or services were supplied in the course of a business (business to business) in the event of non-payment:-
- Entitlement to interest runs from the date after which payment should be made by virtue of the contract.
- The rate of interest is at present 8% above base rate. In addition to interest a successful claimant is entitled to a small sum of compensation for late payment. The amount is £40 for sums less than £1000., £70 for debs of £1001-£10,000 and £100 for debts in excess of £10,000.
The Court reserved the right to waive all or part of this interest in the light of the parties conduct.
Lawson Lewis Blakers are able to offer assistance with:-
• A review of your organisations terms and conditions of business.
• Recovery of outstanding debts.