Banish Bad Debts!
By Evette Orams
Today’s challenging climate means that many businesses are struggling to pay their suppliers on time, if at all! This is resulting in an increase in late payment culture and bad debt in the UK and unfortunately, as this becomes more common place, the probability your business will encounter the knock on effects is considerable.
UK SMEs are being forced to write off tens of thousands of pounds worth of bad debt every year and this figure continues to grow, especially under the current economic climate. Late or non payment has a detrimental effect...
...on cashflow and necessitates an increase in turnover in order to be able to achieve adequate profits to compensate for losses incurred.
Even more worryingly, if a proportionally large debt turns delinquent, it could have devastating consequences, bringing a business to its knees and even forcing the supplier to cease trading.
There are however, some simple measures your business can employ to assist in managing this risk to ensure your business doesn’t become a casualty;
Reduce your bad debt exposure
1. Know your customers
Avoid risks when supplying to new customers by running a credit check. Companies House, and other similar entities, are able to provide a risk status report for a minimal cost.
Always request the customer's business address, rather than registered office or home address, and a landline phone number. This information can be used to track down individuals, even if they have closed their P.O. Box or changed their address and phone number.
2. Ongoing reviews
Credit ratings do vary from time to time and a well rated customer today could potentially be a bad debt in the future. If a customer begins to struggle, their payment to you could be affected. Keep up... continued on page two >