Friday, 1 August 2008
How do you deal with problem payers?
In the current economic climate your cash flow should be a priority and you need to protect it for the benefit of you and your business.
Everyone seems to be holding onto their money for as long as possible and for creative SME’s who are often at the bottom of the food chain this can spell disaster especially as clients tend to be much larger businesses.
Here are a few tips:
Prospective clients: Credit check them. Set credit limits and don’t increase them unless they have demonstrated that they are good payers.
Existing clients: If the time taken to pay has increased or if you have any other reasons to doubt their financial health, credit check your clients.
Don’t be afraid to be as professional with collecting from clients as you are in your other dealings with them.
Understand your clients’ payment procedures and make sure you are in a strong position by having purchase orders, terms and conditions etc.
Sort out those who can’t pay from those who won’t pay and act accordingly – be realistic with the former and tough with the latter. Litigate if necessary – there are some very good debt recovery firms out there.
How do you deal with problem payers?
Posted By Enter the FD's office. at 12:23 PM in Category:
Financial ClinicLink directly to this article.
Replies
Josh Tremble
we're a small marketing shop and we're seeing some clients that used to pay quickly take a while longer perhaps because they are under pressure themsvles. We cant really take them to court yet so what is the best strategy do you think?
7 Aug 2008
Mark Lesbirel
You're so right about this. As a creative it can be incredibly tough focussing on getting the proof of order and proof of delivery. Just an email detailing what you'll do and how much you'll charge is often enough.
But if you run into problems, taking action is actually really easy - provided you have the above. It can be done online here, very simply. https://www.moneyclaim.gov.uk
5 Aug 2008
