Debt recovery from point of contract
Successful credit control and debt recovery starts with getting a contract right from the outset. Here are some of our top tips:-
- Know who you are contracting with. Make sure you know you are contracting with. Is it a limited company or an individual trading as a business entity? Does the company number provided to you match the information on Companies House? Ensuring that you have the correct name and address of your customer and that the contract documentation and invoices are sent to the correct party and the right address can save problems arising if you are subsequently forced to sue for payment.
- Confirm your terms and conditions. If you have standard terms and conditions, make sure these are sent to your customer at the time you are making the contract and try to get confirmation that they have been received. If you issue terms and conditions after the contract has been formed, they have no legal effect and will not form part of the contract.
- Make clear your payment terms in the contract. When do you expect to get paid? What are the implications for your customer if they do not pay you on time? Will you charge interest at a particular rate over base for example?
- Do not assume. Do not assume that you are automatically entitled to charge interest and compensation under late payment legislation. If you state that interest applies at a particular rate in your contract that is the rate you must apply.
- Adopt a carrot approach. To encourage prompt payment of your invoices, think about adopting a “carrot” approach. So for example, your contract might state you expect payment in 30 days but that you will apply a discount if you are paid within 7 days.
If you get all of these things right from the start, it will be much more difficult for a debtor to refuse to pay on the basis that your contract terms are not clear. Spending a bit of time getting it right at the beginning can often save time and money in the long run.
If you would like more advice on debt recovery you can contact our award winning results driven team. Contact Maggie Moodie to discuss this further.
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