Staying in control of what your business is owed and by whom, as well as assessing whether and when they are likely to pay is a full time job for many business owners. During tough economic times, the likelihood of customers or clients failing to pay on time, or not paying at all, is a real threat to every business. This is why it is essential to implement a thorough credit control procedure, as well as protecting your position in every way you can. When unpaid bills are mounting, there are a number of things that can be done.
Here are some things you can do
Include a Retention of Title clause in your terms of business
The inclusion of a Retention of Title clause in your terms of business is a relatively straightforward way of helping you in the event of future problems. This type of clause could help you recover goods that belong to you if your customer or client doesn’t pay. In this situation, you must be able to identify your goods and the customer must not have altered them or integrated them as part of their own product.
Insure your debtors
Credit insurance gives you the possibility to insure your business against bad debts. Taking into account such factors as the products or services you offer and the stature of clients or customers you have, credit insurance could be the right solution. In the event of a customer or client becoming insolvent, the right credit insurance policy enables you to recover at least a proportion of any amount owed to you.
Using personal guarantees
Putting a personal guarantee in place with one or more directors, or a cross guarantee with a connected company of a major customer could provide protection in the event of non-payment.
When a customer or client becomes insolvent, it is best to be prepared for the worst. There are a number of practical things you can do to minimise the ultimate damage, and it is our job at UHY Hacker Young to guide you.
The next step
If you have a customer at risk of insolvency, contact us so we can help identify the best way forward.