FAQ: how can I stop people owing me money, and what can I do when they do?

These are by far and away the two questions I'm most frequently asked. As the issue of late payments gets worse for SMEs, councils struggle against cuts, and landlords face rising tax burdens, it’s becoming more and more important that we address them.

In many ways, the two questions overlap. So whether you’re owed a lot of money or seeking to avoid the situation, I do recommend reading both sets of suggestions.

Avoiding putting customers, tenants and clients in debt

Run checks on new customers. New clients are vital for cash flow, but only if they can afford your services. Credit checks, proof of earnings, guarantors and payment up front for first orders are all ways to address the risk.

Set out clear payment terms. Give a clear timeline for settlement of any outstanding balances and what you will do in the event of missed installments. It warns them against putting it off.

Invoice promptly. There are plenty of automated systems available, so there’s no excuse for delayed invoicing.

Make it easy to pay. Knowing how your customers pay, and offering the latest payment tech, ensures they have every opportunity to do so.

Charge interest. You have the right to charge statutory interest (8%) on sums due that are over 30 days late. It’s a good deterrent against recurring late payment. But be careful not to make debt untenable for struggling clients.

Issue regular reminders. Schedule timely invoice reminders to ensure you’re not forgotten.

Be ready to respond. If you have a system in place to deal with non-payers, you can significantly reduce wasted time and stress.

Recouping unpaid debt

Be open to a constructive dialogue. If they’re facing financial trouble, you can help them and yourself by sorting a repayment plan that suits them.

Find a mediator. If talks fail, the Ministry of Justice has a dedicated site to help you choose a local mediator.

Statutory demands. A ‘statutory demand’ is a legal letter giving debtors 21 days to reach an agreement. If they fail to do so, you can apply to start bankruptcy proceedings.

Court action. If mediation hasn’t worked, you can turn to to a small claims court to have them hear your case and, if they rule in your favour, force the debtor to pay.

High Court Enforcement. Enforcement agents like Dukes have the power to apply to the High Court for an enforcement order that will enable us to collect the debt for you.

Enforcement Agents. I’ll admit to a little bias here, but I believe it’s worth emphasising that companies like Dukes can do all of the above, and decide when is the right time for each measure. Handing the process over to experts can save time, stress and money in the long run.

Many thanks for viewing my post; I hope you found it useful. If you have any private questions on this topic, you can connect with me on LinkedIn and send me a message, or else you'll find my contact details on my LinkedIn profile.