Debt collection tips for smaller UK businesses and sole traders
All UK businesses struggle with recovering debts at some time; so it’s important to operate stringent debt recovery controls and also know the right time to instruct professional debt recovery services. We’ve put this brief guide together to help any sole trader or small business with credit control and collections.
Debt collection tips for UK business owners
Although collecting the cash you’re owed can be time-consuming, it’s essential to have robust systems in place to chase customers for debt. If your business does not have the available time to chase debts or your business leadership team is uncomfortable chasing debtors, one immediate and long term solution to debt collecting issues is to outsource the credit control process entirely (https://firstcapitol.co.uk/credit-control/). Outsourcing your credit management from the outset could be a cost-effective way to handle debt collections and also ensures your business remains at arm’s length. Find out more in our recent article [please insert link to above article when it’s published please], or give us a quick call to learn all the ways the expert teams at First Capitol can save money for your business.
If you prefer to operate your own debt collection in-house, then the following tips may help smooth the process and ensure quicker payments.
– Robust, efficient debt collection relies on the clearest systems to reduce payment delays. Your terms and conditions should be clearly stated on all invoices issued.
– Offering small discounts for prompt payment can often encourage customers to pay within stipulated timeframes. For example, a 2.5% discount for all payments within 30 days of invoice date could boost your business cash flow immensely. If this is the route you decide to go, you should ensure this information is printed in bold type in all your standard business invoices.
– It’s often the case that payments due from businesses you supply are delayed due to lack of information. This is particularly true for larger organisations which may need all invoices approved prior to any issue of payment. One way to avoid situations of this nature is to provide all required details within your invoices or to attach confirmations with invoices. For example, if you have supplied electrical services to a large building contractor client, attaching email or letter correspondence relating to the order could make it far easier for your debtor customer finance team to tie up all the details of your invoice and approve it for payment.
– Another tip for smaller businesses supplying goods or services to larger organisations is to ensure the correct paperwork is in place at the outset. Many accounts teams delay payment to suppliers who don’t quote a purchase order number on invoices. Indeed, if there is no record of an official purchase order some companies will refuse to pay debts at all. In this respect, requesting official purchase orders or signed order forms at the time you receive any order will protect your back and also ensure payments are expedited.
Get in touch with First Capitol today to find out more about us and learn more reasons why our specialist agency is number one for small business debt collections.