The debt recovery landscape has changed a lot in recent months, with new EU legislation and initiatives like the Prompt Payment Code – so what are the newest debt recovery tips?
Here are just a few suggestions that might help you to make the most of the latest tools at your disposal.
1. Terms and Conditions
With all the new legislation in place, it’s smarter than ever to make sure you have clear payment terms and conditions that all of your customers sign up to.
But you can’t just bring these out when you send your invoice – they must be agreed in advance, so get everything down clearly in writing and get your customers’ written agreement before you start work.
That might not sound like a debt recovery tip, but prevention is better than cure.
2. Background Checks
Continuing in the same vein, make sure you carry out background checks on new customers – even if all you do is search their company name online for any negative opinions on discussion forums.
There are plenty of ways to check their latest company accounts and financial performance, or to have a full credit history check carried out too, so you can be confident of how much you can risk ‘lending’ to them before you send over an invoice.
When a customer owes you money, whether as a loan or as payment for goods and services, you are a creditor; make sure you are thinking about outstanding invoices as trade debt, and not as money already in the bank.
3. Penalties and Fees
Under current EU law, there are certain fixed fees, debt recovery costs and statutory interest that you should be able to charge to your debtor.
These are enshrined in law now – but it still makes sense to state them clearly again in your Ts & Cs.
If you incur costs or lose interest payments because of an overdue invoice, don’t be afraid to charge the debtor for that, as far as the law permits.
4. Stay Calm
Finally, one tip that isn’t new, but still applies as much as ever – don’t take it personally. It is highly unlikely that your debtor is withholding payment purely to annoy you (although this does happen sometimes too).
Even if they are, you should stick to the moral high ground, stay calm and professional, and avoid aggravating the emotional side of the situation further.
Be firm and fair, forceful as permitted by law, and tenacious – more often than not, you will get what you are owed in the end.