Small debt, big impact
You work hard, trying to do the best job for your customers, trying to make sure you pay your suppliers on time whilst managing your business to make sure if functions efficiently.
However what happens when your customers or suppliers fail to pay you?
If not controlled this can be a nightmare scenario for business, both large and small.
Impact of bad debs on a business
- Cashflow – Anyone running a business understands the importance of cashflow. Consider the impact on your business if your customers do not pay when required. It may affect your ability to pay your suppliers or meet other commitments. This could have an overall crippling effect on your business and its continuity or your ability to secure credit. Don’t forget – even profitable businesses can go bust if they run out of cash.
- Time and Costs – Spending time in chasing bad debts can take valuable time away from your business. Instead of making money, you may be forced to focus on chasing money.
- Workforce – If your business cashflow is strapped due to bad debtors, it may mean the business is unable pay wages. You may even have to reduce your staff, which could lead to the loss of valued employees, putting additional pressure on the remaining smaller, and perhaps even disgruntled, workforce left coping with continuing and bigger workloads.
Dealing with debtors
- Define your payment terms - If your customers are not clear about your payment terms, including when and how to pay and the consequences of non-payment, there may be misunderstandings and your cash flow may be disrupted.
Of course, one size cannot fit all. It is important to ensure that your business’ terms and conditions are tailored to your requirements and cover the potential issues your business may face at the outset. Please call us, if you think you and your business could benefit from a legal review.
- Do not delay – The older the debt, the harder it becomes to collect. A potential debtor may have gone out of business. Please contact us immediately if you have a debt that requires chasing.
- Start legal proceedings – If all methods of amicable resolution fail and your debtor is simply not responding to you, then you may have no choice other than to start County Court proceedings against them. Please contact us should require advice and guidance in connection with this.
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