Make every step to Court count
Effective credit management has a transformational impact on cash flow. However, in some circumstances, taking Court action to recover a debt is the only course of action left.
It is vital to consider the options available to you in undertaking such an action and to determine the best way of ensuring that you have the cards firmly stacked in your favour.
So what steps can we put in place to assist your action?
It all starts with a good paper trail from customer take on to invoice.
Completing a customer application form will ensure that you “Know Your Customer” http://bit.ly/2mB529A and their trading style. The Pre Action Protocol for Debt Claims which came into effect on 1st October 2017 provides guidelines which must be followed when pursuing a debt owed to you by a Sole Trader or Individual.
If your customer has agreed your terms of business then they are aware of the trading terms, the timescales for raising any issues and your right to add statutory interest and late payment charges in the event that payment is not made to your agreed terms. The terms of business should set out the likely course of action that you will take in the event that payment is not received.
Invoicing promptly on dispatch of goods or on completion of the service and obtaining a fully signed paper trail from order through to delivery is therefore very important.
The paperwork is all in order, now what can my credit controller do?
An effective credit controller will proactively speak to the customer prior to the debt falling due to ensure that the invoice has been received and whether there is anything further required by the customer to process the invoice for payment. This is a courtesy call and should be seen as an extension of great customer service.
It is good practice to document any actions agreed between the credit controller and customer on the telephone by way of follow up email and to action these as quickly as possible. http://bit.ly/2qIjgbm
All communication with the customer should be recorded so that there is a clear audit trail. Some finance systems have the facility to record the credit control chasing notes but if this is not available then there are standalone credit control collections systems which can be used in addition to the finance system. These are designed specifically for credit controllers and they have the functionality to record detailed chasing notes and details of any queries raised by the customer.
The records kept by the credit controller will be used in the details of the claim submitted to Court and are evidence to show the court that you have made every reasonable attempt to recover the debt and that the customer has been properly informed of the debt due and any actions that you intend to take should payment not be made.
The common denominator throughout the entire process is the credit controller. Their role in ensuring that any legal action is properly supported is pivotal to achieving a successful outcome.
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B2B Credit Control - Instalments & Late Payment Interest"Historically repayment plan arrangements have been limited to the odd customer with cash flow issues, it is now more prevalent and credit control software needs to adapt to deal with that, free up the credit controllers time and provide accurate management information”. Janice Megram, Client Services Director, Veritas Commercial Services.
Taking Legal Proceedings To Recover A Debt In COVID-19 TimesOur interview with Michael Smeaton of Bermans....
I asked Michael his thoughts on how matters are currently progressing through the courts because, with around half of the courts being closed, you would naturally expect some delays?