7 steps for avoiding bad debts
DESCRIPTION
Seven useful tips to help protect your business against bad debtsTRANSCRIPT
7 Ways To Avoid Bad Debt
Riskdisk helps thousands of companies to avoid bad debts by allowing them to check the credit status of all their customers.
However, if you’re not yet using our system, the next best way to protect yourself is to use the following guidelines.
We hope you find them useful.
www.riskdisk.com
7 steps summary
1. Don’t assume…They’ll be O.K. After all, they are a limited
company/PLC.
We’ve heard they’re doing really well.
They’re massive.
They’re part of a huge group.
1. Don’t assume…They’re a household name. (The most frequently
checked companies are the largest)
Just look at their prestigious address - even the building
is named after them.
2. Be confident…You have every right to ask:
1. Who/what are you dealing with?
2. Where are they located?
3. Do they have the money to pay?
4. Are they prepared to part with it
promptly?
If you give credit to a customer, you are investing in their business.
3. PaperworkCustomers should always fill out a credit application
form that includes your terms of trading. Ensure that:
They are presented in fluent, unambiguous English.
They apply to all sales.
They include a Retention of Title clause.
They stipulate when payment is due.
3. PaperworkThey supersede any terms imposed by the
purchaser.
They define the point at which ownership (and risk)
passes from you to your purchaser.
They state any interest you wish to charge on
overdue accounts.
4. Get the name rightCheck spelling
Get it typed, not handwritten
Don’t be tempted to shorten names in
correspondence
Don’t be fooled by a fancy name [Trotter’s
International Traders Ltd?]
5. Check the addressMake sure that all addresses completed on your
application form are legible.
Beware residential addresses, check suitability with line
of business.
PO box number and town = extreme caution.
Don’t forget a full postcode.
Beware of ex-directory listings.
6. Phone them…Beware phones that are:
permanently serviced by answering machines.
never answered.
permanently engaged.
answered merely with a number.
answered with only a “yes” or “hello”.
answered with a different name altogether!
7. Check their age…Note that:
40% of all businesses fail within 2 years
New companies are often most stretched after 5
months, when the initial capital typically begins to run
out
Financial information on new limited companies may
not be published for 22 months
7. Check their age…But young doesn’t mean unreliable. However, if there
is no financial history, you may want to insist on:
A guarantee from one or more of the directors.
A guarantee from the parent company (if there is
one).
A guarantee from the ultimate holding company (if
there is one).
The best bet is to check the credit of every customer with a reputable credit agency.
Visit us at www.riskdisk.co.uk or call us on 0844 473 0054 to find out how easy and affordable it can be.