Debt Recovery Made Easier - Some Tips About Giving Credit

Some Precautions to Be Taken When Giving Credit

1 Who is your customer?

Obtain a signed Order from the customer if possible. If not, make sure you known in whose name the Order is being placed and the name of the person who is placing it.

2 Is the order authorised?

If you are in doubt about whether the person ordering has authority to place the Order, don't hesitate to check by phoning or speaking to someone in authority.

3 Business or personal?

We may need to know, if court action is to be taken, whether the Debtor is buying for business purposes or personal use.

4 Build up a customer or client profile.

Keep together as much information as you can about your business customers and clients. These include the following:

• Registration No., if a Company
• Names and addresses of at least one Director/Partner
• Address to which accounts are to be sent
  

5 Note the bank details

Either when you first accept an order, or when you receive your first cheque, make a note of the following:

• Name and Address of Bank
• Bank Sorting Code
• Bank Account No

6 Get a bank opinion

Where you are going to give a lot of credit to a new customer, it's best to get a bank opinion first. There is a bank opinion Consent Form which you should arrange for the customer to complete, but bear in mind that only participating banks will answer the application. If all your customer has is a building society or savings account, be wary: it's his record operating an account which can be overdrawn which matters.

7 Notify your credit charges early

It's a good idea to charge interest on outstanding accounts, so make sure that the representative or first contact from your Company notifies the Debtor before business is done that the interest charge will apply. You can do this by letter or verbally.

When Instructing Us

When instructing collection, please send us three copies of the invoices and statements relative to the debt.

If there is a running account, these should go back as far as necessary to be able to determine when the earlier invoices were fully paid off. In cases where round figures are paid to account from time to time, it may be necessary to go back rather further so that the original invoices and payments can be tied up. (This is to prevent a situation where a Debtor claims that he did not pay a particular invoice because he did not agree to pay it.)

If you are collecting a small debt (under £200) there are problems over expenses of collection. Unless you are confident that the money will be forthcoming, bear in mind that the expenses can soon amount to more than the amount of your debt. This is particularly so where the Debtor does not live in your local district. That's why we recommend only our SMALL DEBT PACKAGE if you are uncertain whether (a) there's money to pay your account, (b) the claim may be contested or (c) you have no particular desire to pursue the debt simply as a matter of principle.