10 tips for avoiding bad debts

At Grace Frank we can help businesses with cash flow and avoiding bad debts. Here are some tips…

Bad debtors can be very dangerous for new and expanding businesses, having a damaging impact on cash flow.

Here are 10 tips for avoiding bad debts:

  1. Obtain a credit reference on the organisation that you intend to trade with
  2. Avoid doing business with companies whose credit rating is poor
  3. Ensure that the other company knows your payment terms at the outset
  4. Invoice at the earliest opportunity
  5. State the payment terms clearly on your invoice
  6. If payment is not received by the due date, send a reminder as soon as possible, and certainly no longer than one week after the due date. It is good practice to have a policy to chase the debt after a fixed number of days following the due date
  7. If there is still no response, chase up the debt by telephone. This will enable you to determine whether there are any queries on the invoice and, if not, to discuss a date for the settlement
  8. Write to confirm the agreed settlement date and send by fax or post
  9. State clearly that the matter will be referred (after the agreed extended period) to either:
    • A debt collection agency
    • A firm of solicitors, or
    • The county court small claims department
  10. If the debt is still due after this, keep your word and take action

If you would like help with cash flow and avoiding bad debts, contact Grace Frank.

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Grace Frank LLP, Chartered Accountants, is a limited liability partnership registered in England and Wales, Registered number OC375216. Registered office Grace Frank LLP, Unit 10, 1 Luke Street, London EC2A 4PX . Members: Morisha Christy FCA, Morishac Limited. Regulated for a range of investment business activities by the Institute of Chartered Accountants in England and Wales. VAT registration no. GB138 7186 84.