Post Recession Credit Control Tips

Although we are nearing the end of the recession

, many businesses are still struggling under financial constraints and trade depreciation. It is crucial therefore that businesses remain in control of their debt recovery. A prudent business should consider the following:

- Reviewing your terms and conditions: regardless of the economic climate, any business should ensure that their own terms are both up-to-date and tight. In particular consider including in your terms and conditions a retention of title clause. Make sure that your standard terms are those that govern any agreement with anyone you do business with. Consider instructing a solicitor to prepare or update your terms conditions - this is often a very simple and cost-effective way of significantly tightening your credit control.

- Knowing your clients and customers: business intelligence may warn you if an existing customer is in financial difficulty. In particular you may wish to consider using credit checks, payments upfront and even personal guarantees from company directors of those businesses you deal with - especially if you have not dealt with them before.

You don't always need to rush to court or immediately instruct solicitors. Other ways of enforcing debt recovery are exercising a lien over goods belonging to the debtor or refusing to deliver further goods or services to the debtor.

- Claims below 5000: you may find it more economical to pursue such smaller claims online via the government website www.moneyclaim.gov.uk

- Insolvency proceedings: although it is a highly aggressive tactic and may damage your relationship with your customer, you might want to consider the use of insolvency proceedings. These may be appropriate for use against either a company or an individual where there are debts over 750 and where there is no arguable claim. If used effectively and at a suitable time, insolvency proceedings can be very successful.

A 'winding up' petition is a final resort, but can still bring a successful result if used appropriately against a corporation.

If you are able to win a court ruling against a creditor then you could think about the different ways of enforcing this judgement - including the use of both attachment of earnings orders and court bailiffs.

Above all keep talking. As successful business is all about maintaining good and trusting relationships ' the use of insolvency proceedings should only be undertaken if it is your only remaining option. Try and keep your relationship with your customers or debtors going by keeping communication channels open.

Lastly, remember how cost effective and successful a basic debt recovery letter from a solicitor can be. Some solicitors offer free seven-day letters and many others will do so for as little as 25 or less. If the debt that is to be recovered is large, you should always seek the advise of an practised debt recovery solicitor.

by: Tim Bishop

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