Increase your prospects of cash recovery post lockdown

Recent figures released by the ONS reveal that one in ten businesses admit a moderate risk of insolvency as a result of the Covid-19 pandemic with a further 1 % considering that risk to be “severe”.

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Increase your prospects of cash recovery post lockdown

Recent figures released by the ONS reveal that one in ten businesses admit a moderate risk of insolvency as a result of the Covid-19 pandemic with a further 1 % considering that risk to be “severe”.  The figures also reveal that 41% of 20,000 businesses surveyed believe they only have sufficient cash reserves to continue trading for another six months.

With many businesses teetering on a cliff edge it has never been more important to protect your cashflow. There are some steps you can take now to maximise your prospects of being paid and to avoid becoming a victim of the economic downturn:

  1. Monitor your customers’ financial health

Utilise the free information available from Companies House. You can “follow” companies on the website to be informed of any changes.  Although much of the information is historic there are some warning signs to be aware of (such as a failure to file accounts on time or registration of one or more CCJs).

If you have access to a credit agency, ensure you regularly check credit reports for your customers.  This is a more comprehensive tool than Companies House and will give you a better insight into a customer’s current position.  If there has been a recent reduction in credit score or an increase in the amount of time taken to pay invoices, it may be time to take action.

  1. Review your ledger

Carry out a regular review. Ensure you know what each of your customers’ payment terms are and that you are proactively chasing payment as soon as those terms expire.

  1. Communicate with your debtors

Regular dialogue can help identify any potential issues with payment at an early stage and enable you to take steps to protect your position (such as cancelling pipeline orders or putting deliveries on hold).

  1. Get your paperwork in order

Wherever possible ensure you have a signed contract in place with your customers/sub-contractors/clients.  This allows you, where appropriate, to ensure your terms & conditions are incorporated.  A signed credit application form can also be helpful.  Keep all purchase orders/acknowledgments and proofs of delivery.  If a dispute later arises as to what was ordered or by whom, written records can make it much easier for you to pursue the debt through the Courts, if necessary.

Review your terms and conditions to ensure they provide as much protection as possible.  Do they provide for interest on late payments? Do they give you the right to terminate a contract for non-payment or the right to demand immediate payment of all debts (whether or not they have fallen due) if an invoice becomes overdue.

  1. Don’t delay

If a payment is overdue, ensure you take swift action to pursue it.  If your debtor is not paying you, the chances are they are not paying others.  The faster you take action, the greater the prospects of being paid.

If your attempts to chase payment are unsuccessful, take expert advice on your options.

Keebles offers a ‘no recovery, no fee’ collection process which means that you do not need to pay anything to us if we are unsuccessful in recovering your aged/bad debt at the pre-legal stage.  There is no obligation to take further action so there is no risk to you in pursuing this course of action. If you do decide to issue legal proceedings, we offer a fixed fee service to give you certainty on costs.

We have an enviable track record in recovering our clients’ debts and, in fact, have recovered more for our clients since lockdown than in the same 6 month period last year.

For further information or advice on your options, please contact Rachel Crookes on 0113 399 3460 or email rachel.crookes@keebles.com

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