Risky Business: Advice on safeguarding against debt for small businesses
Keeping debt at bay is a difficult thing to do if you own a business, but by taking a few safeguards against debt, the chances of it taking a hold can be reduced.
Protect your business from debt first
If you are considering trading with a client, always carry out a credit check to ascertain how much credit you can offer. This could be based on the overall credit score of your new client and the amount of debt that they have acquired on their record. If a client ever exceeds a set credit limit or is untimely with payments, put a hold on their account until it is brought back in line with the terms of the agreement, it could save both you and your client from suffering with debt problems.
Always ensure that your clients have read and understood the requirements of your terms and conditions before you begin, and ask them to sign and return a copy. This will be a useful document if one of your clients fall into debt and you need to proceed with legal action. Any invoices should always stipulate the payment due date and the terms of payment.
Keep an eye on your clients debt
If some of your customers appear to be accumulating a large debt with you, it is advisable to make some subtle enquiries to find out if they are experiencing financial difficulties or are experiencing any other problems which make it difficult for them to pay you.
If you have tried every method available to retrieve an unpaid debt, you could take the matter to court or hire the services of a debt collector. In some cases, a debt collector will buy the debt from you and work independently to retrieve monies owed.
