The global pandemic and Britain’s exit from Europe have created unprecedented challenges, changes, and pressures for businesses in the UK. Whilst some businesses are less effected, and some sectors, such as IT and construction, appear to be thriving, it is an unfortunate reality that many businesses will struggle to survive. The knock-on effect of this will be far-reaching.
With this level of uncertainty, it has become more important than ever for businesses to get paid swiftly for the work they do, the goods they sell and the services they provide. This is not only to help bolster their own finances and ensure their survival, but because such economic uncertainty means they can never be entirely sure if those they are trading with will be able to weather this storm.
At TM Law, we have many years’ experience in recovering money owed to businesses. As a result, we also know the mistakes businesses make when it comes to credit control. We therefore think it will be helpful to share a few things businesses should ensure they are doing so that, should they need our help in the future to get their invoices paid, the likelihood of payment is increased.
Tip 1: Ensure your terms and conditions of trade (T&Cs) are up-to-date, legally robust and communicated to your customers.
Your T&Cs set the basis for how and when your invoices are due for payment and customers should always be made aware of them before you trade with them. You should ensure they are up-to-date, relevant to your business and legally robust. Should a customer not pay their invoices, your T&Cs become hugely important from a legal perspective and so reviewing and updating them should not be overlooked, and TM Law is able to assist in this regard.
Tip 2: Consider payment in advance or a Director’s Guarantee, especially for new customers.
In an ideal world, you sell your goods or provide a service to a customer and shortly afterwards they pay their invoice. However, these uncertain times mean that a new customer, without a track record of paying your invoices on time, poses an increased risk of non-payment. Consider not extending credit until you are comfortable that they are good payers or, if providing credit is essential to developing an ongoing business relationship, request a Director’s Guarantee. A Directors’ Guarantee is a personal guarantee by a director of a company which makes them responsible for a debt if their company cannot pay it. You can find out more about them in our recent blog: https://www.tm-law.co.uk/directors-guarantee-coronavirus-challenges-for-small-business/
Tip 3: Ensure invoices are properly addressed, including the full legal title of the of the company, partnership, sole trader or individual you are trading with.
An invoice is a legal document so ensuring it is properly addressed removes any uncertainty or ambiguity as to who is liable to pay your invoice.
Tip 4: Ensure invoices are issued promptly.
An invoice arriving promptly has the benefit of the goods or service you have provided being fresh in your customer’s mind and increases the likelihood of it being paid swiftly. Your invoice being issued also starts the countdown on your payment terms which means that if your invoice is not paid on time, you can start to chase payment through other means sooner.
Tip 5: Ensure your invoice states when payment is due. When that date arrives, chase for payment.
By including the date that your invoice is due for payment by on your invoice, you remove any uncertainty that you expect payment within a certain timeframe. When the due date for payment passes, immediately chase for payment. The longer you wait to chase for, the harder it usually is to recover a debt.
Tip 6: If overdue invoices are not being paid, despite chasing them, contact TM Law.
We frequently find that businesses only contact TM Law when their invoices are long overdue. Whilst we understand a certain reluctance to “set the lawyers on a client” as it’s “bad for business”, nothing is as bad for business as supplying goods and services that you will never get paid for.
As experts in the field of recovering money owed to business, TM Law knows the most effective ways to get our clients the right results and often, the fear of legal proceedings is enough. At TM Law we are always happy to have an introductory chat to see if we can help recover what is owed to you and it is worth noting that the cost of our services can often be offset by charging compensation and interest to whoever is not paying your invoices.
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This blog post was originally featured on this members own blog.