These are difficult times for any business and good cash flow must be maintained.

This means that businesses will have to strike the right balance between pressing for payment and empathising with their customers, who are in the same boat.

Here are our top tips to keep your cash flow healthy during the COVID-19 pandemic:

Standard Terms and Conditions of Business

These are essential to protect your business. They set out the legal basis on which you contract with your customers and what happens if things go wrong. They should include your payment and delivery terms, cancellation, exclusions and the scope of any warranties offered by you.

Identify your customer

Company, partnership or a sole trader? You must be certain of this if you have to sue.

Confirmation of orders 

Commit the order to writing (incorporating your Standard Terms and Conditions!). Ask your customers to confirm the order in writing 

Proof of Delivery

Goods are not being signed for so think about how to prove the goods have been received  in case your customer disputes delivery.

Invoice on delivery 

A delayed invoice inevitably means delayed payment. 

Maintain a strict credit control process 

Most businesses will already have a credit control procedure to ensure that invoices are paid. It is vital that the process is strictly adhered to.  If you don’t have a credit control procedure, formulate one. 

Communicate 

It is essential that you maintain a line of communication with your customer. Make sure that they have received a copy of the invoice before it becomes overdue. Address any issues raised by the customer and confirm in writing. If your invoices remain unpaid, telephone and email your customer to find out why. 

Time to pay

If your customer is unable to pay your invoices on delivery and seeks time to pay, consider the proposal carefully. You are not your customer’s bankers. Are the proposals realistic? Are you confident that the payment plan is workable for both of you? If you are minded to accept, is the customer prepared to offer any security? If you agree a payment plan make sure that it is confirmed in writing by the customer and is  closely monitored. Also include an accelerated payment clause in the event of default.   

Be assertive 

Yes, your customers are facing difficult times, but so are you! Make sure that they understand you are not their line of credit. Do not be afraid to threaten them with legal action if they won’t pay and to follow it up.

Review your ledgers

Look at your bad debt ledger at regular intervals. Make sure that your aged debt does not become overwhelming. Consider offering a discount (on a without prejudice basis) as an incentive for payment of a long overdue debt.

Seek Advice 

Are your customers playing for time? Have you been promised payment too many times? Do you have concerns about your customers solvency? Seek expert legal advice as soon as possible. Remember that if you have not been paid, there will be other creditors who may try to steal a march on you. The quicker you act in these circumstances the more chance you have of recovering your debt.

Should you need to seek advice then please use the enquiry form above, or call Robert Barnard (07469049216) of Lupton Fawcett’s Debt Recovery team for a free no obligation consultation.

 

Please note this information is provided by way of example and may not be complete and is certainly not intended to constitute legal advice. You should take bespoke advice for your circumstances.

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