Collecting debts - checklist

Collecting debts - checklistAlmost every business will experience late payment at some point. This practical checklist will help you recover the money you are owed

  • Set up a system to track outstanding invoices. Accounting software can help you monitor when payments are due quickly and easily.
  • Start chasing as soon as an invoice becomes due for payment. If no contractual payment period has been agreed, invoices must be paid within 30 days.
  • Check that all the invoice details are correct including the invoice amount, due date, customer details and your company information including payment details.
  • Make it easy for customers to pay you by offering a range of payment methods.
  • Draw up a timetable, setting out what emails, letters, phone calls or other action you will take at each stage when chasing a debt.
  • Investigate costs and decide whether to involve external help at any stage. Ensure that any debt collection agency you use is reputable.
  • Keep a file for recording the date of each action, which individual you contacted, and the contents of any telephone conversations.
  • Identify the correct contact, and issue a polite reminder letter as a simple first step.
  • Follow up with professional but friendly telephone calls.
  • Consider alternatives such as email reminders, or visiting the debtor in person.
  • Discuss and tackle any problems which are preventing payment.
  • Handle any excuses, and ask for a date when you can expect payment but be wary of delaying tactics.
  • Use your judgement to decide whether to claim interest and debt recovery costs under late payment regulations.
  • Follow up to make sure the customer is doing what has been promised.
  • If the customer claims financial difficulties, attempt to negotiate a schedule of payments.
  • Be prepared to stop further credit sales until you have been paid to put pressure on the customer and avoid further losses.
  • Consider mediation to find a solution that avoids the need for legal recourse.
  • If you cannot reach agreement, send a letter of claim warning of your intention to sue for the outstanding debt.
  • Investigate whether it is worth taking legal action. Assess the customer’s ability to pay, and the likely time and costs involved.
  • If you pursue the case, continue to attempt to negotiate an agreed settlement rather than going to court.
  • Be prepared to take further legal action to enforce payment if necessary.

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