FACTS: The best way to ensure that debts are paid on time is to develop and consistently apply a policy of credit control. This will ensure that you customers clearly understand your terms, and make sure they are enforced.
"When Commercial Credit
Control began working with
us, our debts over 60 days
were in excess of £300 000,
by carefully implementing
procedures this was quickly
reduced to £1500."
Should you be afraid of chasing a big national company for payment?
A small two man web design business had been trading for approximately two years and had earned a good reputation for their work although they were struggling financially. Based on their reputation, they had an enquiry from a national company which was well received. They were approached to do some adjustments on a design project as an initial opportunity.
A quotation was submitted and accepted and the appropriate Terms and Conditions signed and agreed.
The project advanced well and the client’s satisfaction was evident throughout all email and other communications.
When the final invoice was submitted the client refused to pay, saying they were unhappy with the work produced.
Given their financial situation the web company needed payment to survive since the efforts on this client had taken all their focus.
Added to this were the natural concerns on the damage to their reputation on the marketplace and the expected fallout. Would their national client damage their reputation and to what level?
A large debt sat unpaid on the ledger and they didn’t know how to approach their client or chase for payment. The client’s Legal department is formidable and the costs of litigation too onerous.
At this point Commercial Credit Control took on the debt, contacted the debtor to find out why the invoice had not been paid and discussed various ways of moving forward.
The invoice was paid within twelve days of Commercial Credit Control getting involved. Given the background the client, was satisfied on results and timescale achieved and agreed that they should chase large national companies for payment. The really important achievement, however, was that the introduction of a third party allowed the relationship to continue without much loss of face or values.
One of few? Unfortunately not - one of many!
In business if the service or product supplied and appropriately contracted for meets the contracted criteria there are no reasons why payment should not be made as per contract. This is regardless of the client’s inability to pay, perceived or real.
‘David and Goliaths’ do not exist in this scenario and the damage to reputation is usually harder on the bigger company’s side.
What is evident though is that debt recovery, when handled appropriately and by an experienced and knowledgeable third party has a major part to play in a good conclusion and healthy onward relationship.