Top Tips for Avoiding Bad Debt

Carrying bad debt in a business is never good. Business owners understand the importance of maintaining healthy cash flow and ensuring that time and resources are not wasted chasing debts which are due. 

How can I minimise bad debt in my business?

There are several steps which a business can take to help you maintain cashflow. For example:

• Making enquiries of your customer's financial position and consider undertaking a financial check before you extend them any credit;
• Considering taking a deposit for the goods or services you are providing;
• Making sure the terms and conditions for your business contracts are precise and delivered to the customer as soon as possible so that you are able to rely on them if you become involved in a dispute with customers;
• Providing quotes and estimates in writing so that there can be no issue determining what you have agreed to provide to your customer;
• Keeping records of quotes or estimates in writing;
• Recording in writing if any quotes or estimates increase, and the reasons for those increases;
• Keeping communicating with your customer to make sure they are happy with your goods and services;
• If there are any issues with your goods or services, try to rectify the problems immediately;
• Making the date for payment clear on your invoices and keeping records for dates when invoices fall due; and 
• Sending reminders for non payment of invoices, in writing, as soon as the time for payment expires.

What can I do about customers who won't pay?

If a customer simply isn't paying despite your best efforts, and you have chased them with no success, the next step would be to instruct a legal professional to pursue the debt on your behalf. 

At Samuels, we have a streamlined debt recovery service, designed to support your own credit control procedures. We charge very low fixed fees for this service, which includes sending demand letters, swiftly followed by assisting you and your customer finding a resolution using mediation or some other form of alternative dispute resolution.  

In the rare cases where payment is not made after demand letters are sent, or the matter has been mediated, we can assist you with issuing court proceedings against your debtor. We understand that this will be a last resort for most businesses, and we can help you though every step of the process. 

We understand the difficulties faced by individuals and businesses who are owed money, but don't have the funds to pursue a claim. We are committed to assisting clients with access to justice and if you have a strong claim, we will always consider your legal funding options with you at the outset, which can include conditional (no win no fee) arrangements, where appropriate, although this type of arrangement may not be suitable for every type of debt claim. For example, we would not be able to offer a no win no fee arrangement if your debtor is likely to go insolvent, if they are based outside of England or Wales, or if the value of the debt is low. 

If you or your business are struggling with bad debts, we can help. Contact us today for a free no obligation discussion about the services we provide.