Getting paid on time
7th Sep 2007
In business, it doesn’t matter if you do the best job in the world – if you don’t get paid for the work you do, then your business will not succeed.
Credit management is vital to the success of your business, big or small. Before taking on any work, there are three crucial questions:
- Who am I dealing with?
- What are the terms of my contract?
- How and when will be I paid?
If you don’t know exactly who your customer is, there can be trouble. When a customer fails to pay, you need to know who to pursue.
Was the person who ordered from you a sole trader, a director of a company, a partner in a business or an employee? Did he have authority to deal with you?
Without accurate customer details you may not receive payment at all. You and your staff need to be aware of the need for accuracy in recording customer details.
It is also important to ensure that payment terms and delivery times are clearly set out, preferably in writing and signed by the customer.
Your solicitor can assist in preparing suitable written terms and conditions for your business and in advising you on how best to ensure that your terms apply and not those terms on a customer’s order form.
Taking a few moments at the outset to record the job can save time and money later. Your solicitor can offer advice on putting in place a suitable credit management system for your business.
Deliver your bill promptly after you have finished the work, or even beforehand if this is appropriate. A grateful customer may pay willingly immediately but if you delay in sending your bill then the chances of non-payment increase.
You need an agreed policy in your organisation for chasing payment. Polite but firm requests for payment should be made, but when payment is not made you need to take action.
Do not be deterred by the prospect of having to sue. Remember, a client who fails to pay is a client not worth having, and the sooner you take action, the better the chance you have of recovering payment.
Taking court action for debt recovery using a solicitor need not be expensive. Legal fees can be recovered from the debtor, and for business debts you can now normally claim interest at eight per cent above base rate, together with penalties for late payment ranging from £40 to £100.
Your solicitor can use the most appropriate enforcement action to recover payment, and in many cases the interest recovered can exceed any fees incurred.
Remember, doing a good job is not enough – you deserve to be paid for all that hard work.
* Tom Lisgo is a Partner in Blackett Hart & Pratt Solicitors. For more information, contact him on 0191-221 0898.
Author: Tom Lisgo, Partner (TomL@bhplaw.co.uk)
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