COVID-19 Q&A | Sintons | Debt Recovery
During these unprecedented times, where the situation is changing on a daily basis, we are aware that individuals and business owners will have many questions and uncertainties about how these developments impact on them.
Here, through a series of Q&A with expert lawyers from across our firm, Sintons hopes to be able to answer some of those pressing questions, and provide some certainty and clarity for people who are unsure how to proceed.
Q – I run a business and am owed money by a company I have heard is struggling. How do I collect my debts quickly to recover what I am owed?
Enforce your payment terms strictly. Devise a step by step plan as part of your credit control and you can always include a telephone call a few days before, to prompt payment by reminding them that payment is due.
Consider whether your customer is someone you want to continue to do business with or someone with whom you have a long-standing relationship. If so, it may be worth taking the time to make a phone call and understand what is happening in their business before sending payment demands. Consider agreeing a repayment plan with the customer to repay the invoice.
If you have not been paid on time, then you do need to act quickly. Adhere strictly to your payment demand process and keep a careful note of all correspondence and telephone conversations with the debtor. You can send more than one payment demand, but always remember that with each demand, you are providing the debtor with more time to avoid payment.
For all your efforts, there will always be a customer who either can’t pay or is simply delaying payments to manage their own cashflow. Determining which your customer is, is the key in acting appropriately.
Q – I have a great relationship with one of my clients but they have not paid my most recent invoice. It is now several months overdue. I hope to continue to work with them, but need to be paid for what I have done. How can I go about claiming a debt while retaining a relationship?
A – Maintain communication with your clients – it is critical to maintain a good working relationship at any time but particularly now. Take time to make a phone call to understand their position in the current situation and what impact the Coronavirus is having on them.
You will have genuine clients who still want to do business with you, even though they have unpaid invoices. In that situation, consider agreeing a payment plan for their unpaid invoices and any further goods supply on a pre-payment basis. Paying you a fixed monthly sum will possibly assist the client to better manage their cashflow and it will ensure you get paid!
In these difficult times it may be useful to review credit limits and where possible, payment arrangements for all your clients. Depending on what sector you and your clients operate in, consider whether you can review your payment terms to payments on account, payment on delivery, or offer instalment payment plans for goods. Further steps can be considered to prompt payment of your invoice on the due date ie, a gentle reminder by way of an email or a phone call a few days before payment is due just to remind your client that the payment date is looming. Most clients would not be offended by such a call and would usually welcome the reminder.