“Business cash-flow problems? Having trouble getting money in that’s owed?”
As a director it can be very challenging when your business is faced with insolvency and it can be even harder when part of the reason your business is insolvent is because other businesses have failed to pay money to you. This page is a guide to give you some ideas to help bring some of that money in to support your company cash-flow problems.
- Can you do a credit check, if not what about a bank/trade references, or both.
- Make sure you have terms and conditions in place no matter how close the relationship is. If you have terms and conditions in place revisit them to make sure that they are still up to date and are relevant now. Ensure they include a statement outlining what will happen in the event of late payment (interest added for example).
- Do not deliver goods/services unless the T&Cs have been agreed in writing.
- Make sure you set out clearly what is being provided and when you expect to be paid. Use plain and simple English.
- Credit limits – consider making certain credit limits for your more high risk areas of your business.
- Know your business. Far too often directors do not know where the company revenues come from. Look at your past bad debts and see if you can identify trends and or which areas pose the highest risk. Refer to 2. Above.
- If the company you are dealing with is a limited company ask for personal guarantees.
- Ask for a signed deliver/satisfaction notice when the work is completed or goods delivered to avoid disputes later.
- Know who influences the payment decisions in the business you are supplying to. Make sure any invoice is going to the correct person and department and refer to 4. And 8. Above.
- Have a process in place for late paying customers and make sure it is consistent with your T&Cs. Be polite but firm.