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Credit control: A Guide for Start-ups
How do I chase up debts?
Chasing debts is always an awkward process, but you need to be firm. Follow these tips:
- Use the phone. Don’t just email customers when their payment is late – an email can be easily ignored. Get them on the phone so they are forced to explain the reason for the delay. Keep a written log of all your calls as evidence.
- Insist on dates. A customer might have a thoroughly legitimate-sounding excuse, but you should always insist on a practical outcome – when, exactly, can you expect to be paid? If they claim a cheque is ‘in the post’, ask for a cheque number as proof.
- Be persistent. Don’t be fobbed off by a promise of a call back – if the customer says they are too busy, ask them when they will be available for a call again. Keep calling whenever you can.
- Use an external debt collection agency. If the above methods bear no fruit, call in the experts. They normally charge commission of around 10% for collecting commercial debts.
- Send a letter of claim. If all other methods of chasing up have failed, send the customer a letter of claim – this will state that you plan to start legal proceedings if the customer doesn’t settle their debts within a certain time. You need to send one of these before you can sue.
- Sue them. Debts under £10,000 can easily be collected using the small claims track at the county court, for a small fee. You won’t need to hire a lawyer for such amounts, but you should consult a solicitor if you plan to instigate proceedings for anything higher.