Most businesses will at some point struggle with ensuring that their customers pay their invoices promptly or at all, and for others it can be a regular occurrence. This can have a significant impact on your business’ cashflow and overall financial position.
What can you do to improve your position and make sure that you get paid? Here are some things you might consider:-
- Preventative Measures – Before the goods or services are provided, you might at the outset consider running credit checks on your customers to check their financial position. You might also like to consider asking customers to provide a deposit or payment on account if appropriate
- Correct Paperwork – You can potentially improve your position by ensuring that your paperwork is in order. This might include making sure that both parties have signed the contract or, if there is no written contract, ensuring that your standard terms and conditions have been validly incorporated into the contract
- Internal Debt Collection Procedures – It is a good idea to have debt collection procedures in place so that unpaid invoices are chased up early and at regular intervals. This may help you to establish at an early stage whether the invoice is disputed and you can attempt to deal with any issues raised by the customer
- Retention of Title – It is worth checking whether your contract contains a Retention of Title clause which might allow you to recover your goods in the event that you are not paid and/or prevent your customer from selling or using the goods pending payment
- Formal Action – It may be necessary to consider formal action to recover the unpaid invoice. The first step is to send a Letter of Claim in accordance with the applicable Pre-Action Protocol. If payment is not made by the deadline, you might consider issuing Court proceedings or pursuing insolvency proceedings against the customer.
If you would like further details on how we can help you recover unpaid invoices, please contact Liane Simmonds in our Dispute Resolution Team.
