Best Practices To Safeguard Your Business From Bad Debts
Our top tips to help protect your business and avoid Bad Debts
Bad Debts typically occur when you’re unable to collect payments for products delivered or services rendered. It becomes expenses you pay instead of the income you expect to get, resulting in reduced working capital and profitability. It also means you’ll have less cash for your daily expenses. You may even struggle with paying your bills.
Bad Debts can destroy cashflow and are dangerous for growing businesses, harming cashflow and holding back expansion.
Fortunately, there are various best practices to protect your business from Bad Debts. We offer business support to all clients and can help you put strong processes in place to guard your business against Bad Debts and identify sales opportunities, keeping a sustainable cashflow. Check out our top tips to help protect your business and reduce the risk to avoid Bad Debts:-
- Check credit references before trading.
- Avoid companies with poor credit ratings.
- Agree payment terms upfront.
- Set payment terms out clearly on invoices and stick to them.
- Invoice as soon as possible.
- Issue reminders quickly.
- Establish robust collection tactics.
- Maintain communication with customers.
- Chase overdue invoices by telephone to resolve queries and agree on a settlement date.
- Settle payment disputes quickly and negotiate whenever possible.
- Follow up all conversations confirming any agreements made in writing.
- Inform that unpaid invoices or ‘debts’ will be referred to an external debt collection agency, solicitor or small claims court.
- Follow through and take action if payment still isn’t settled.
Even if you can’t completely safeguard your business from Bad Debts, you can lessen the total or likelihood of Bad Debts by applying the above practices. You could also look at a Bad Debt Protection Policy, we can give further detail of this if required.
Speak to our friendly team for tailored support, contact our office on 01204 398816 or email: info@independentbusinessfinance.co.uk we can provide you with the business support, assistance and guidance you need!
