Recovering business debts

Recovering business debts

Your business both owes, and is owed, money. That’s normal, but it’s also a challenge when it comes to managing your cash.

To maintain good cash flow, it’s important to stay on top of both your debtors and your creditors. This includes understanding your options for recovering debt from slow paying customers, and the actions that could be taken against you.

Credit control

Regular, firm action is often needed to get money from some customers. Do it well and the money should keep coming in and your exposure to bad debts kept to a minimum.

You can expect your suppliers to take the same approach. If you’re having difficulty paying, it’s better to be as open with them as you can. Agreeing to pay your debt in small amounts over several months is better than continually making and breaking promises, or simply ignoring their attempts to get in touch.

Invoice factoring

Factoring is not just an effective way to improve your cash flow; it also outsources your credit control function into the hands of experienced professionals.

If you simply don’t have the time or resources to pursue debts, and that’s creating a cash flow problem, invoice factoring could be the right solution for you.

Solicitor’s letter

Sometimes the threat of legal action is enough to provoke a response from a reluctant payer. For a few pounds, your solicitor can raise the spectre of court action, but you’re not committed to following that route.

If you receive a solicitor’s letter, take it seriously. The next message you get could be notice of court action, or a winding-up order.

County court judgement (CCJ)

There are various forms of court action, ranging from small claims upwards. Taking legal action against a debtor can feel like a last resort, but it can also bring results.

Your debtor can avoid getting a CCJ against them if they pay for both the debt and the court fees. However, if they can’t, or won’t, pay, perhaps because they are in serious trouble, getting a CCJ allows you to take further action to recover at least some of your debt.

This also applies if your creditor initiates legal action. There’s still time to pay and avoid a CCJ, but you can’t afford to wait.

Distraint

This is the power to seize the assets of a debtor and sell them at auction. It’s an action of last resort, involving bailiffs entering your debtor’s property. It requires a court order, which will follow a CCJ.

However, if your business owes money to HMRC or your landlord, they have the right to distrain without court action. If you are in debt to them and cannot negotiate a payment schedule, they could turn up to seize your property.

Business Recovery

When you’re chasing, or being pursued for, unpaid debts, your cash flow can be stretched incredibly thin.

Business Recovery helps firms like yours to address that lack of cash by finding extra working capital from new sources. Our network of specialist funders is looking for opportunities to put money into successful businesses, using a variety of different means.

Don’t let cash flow concerns continually distract you from the opportunities for growing your business. Why not give our commercial finance experts a call right now, to discuss the options for additional funding?

Our service doesn’t cost you a penny and it could make the difference between running out of money and achieving substantial growth in the months ahead.