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10 tips for avoiding bad debts
At Attwoods we can help businesses with cash flow and avoiding bad debts. Here are some tips…
Bad debtors can be very dangerous for new and expanding businesses, having a damaging impact on cash flow.
Here are 10 tips for avoiding bad debts:
Obtain a credit reference on the organisation that you intend to trade with
Avoid doing business with companies whose credit rating is poor
Ensure that the other company knows your payment terms at the outset
Invoice at the earliest opportunity
State the payment terms clearly on your invoice
If payment is not received by the due date, send a reminder as soon as possible, and certainly no longer than one week after the due date. It is good practice to have a policy to chase the debt after a fixed number of days following the due date
If there is still no response, chase up the debt by telephone. This will enable you to determine whether there are any queries on the invoice and, if not, to discuss a date for the settlement
Write to confirm the agreed settlement date and send by fax or post
State clearly that the matter will be referred (after the agreed extended period) to either:
A debt collection agency
A firm of solicitors, or
The county court small claims department
If the debt is still due after this, keep your word and take action
If you would like help with cash flow and avoiding bad debts, contact Attwoods.
The practices of Attwoods are carried on by Attwoods Accountants Limited, Attwoods Business Services Limited, Attwoods (Bromsgrove) Limited, Attwoods (London) Limited and Attwoods CCA Limited. Regulated for a range of investment business activities by the Association of Chartered Certified Accountants.