In light of the collapse of Carillion, businesses have contacted us to ensure that their position with suppliers and customers are as robustly protected as they can be. Often they are not. So here are my five top tips:

1. Know your client.

Is it the individual you talk to or their business with whom you contract? If it is their business are they a sole trader, a limited company or in a partnership? If they own more than one business, which is it that you are contracting with? It is not unusual for clients to be confused about this fundamental issue which is critical for getting paid.

2. Do your due diligence and research the business.

Consider obtaining credit reports and, in relation to individuals, check the Insolvency Service website to make sure that they have not been made bankrupt. If you have concerns about the financial status of the business and you are supplying on credit, you may wish to obtain personal guarantees from the directors and/or payment on account and set a strict credit limit. If you are supplying tangible goods, a retention of title clause in your contract is a must, because this allows you to recover goods that have not been paid for (to the extent that they have not been subsumed into a product). For your suppliers this is also important – if they stop supplying suddenly, could you be in breach of your obligations to a customer? Information is part of the armoury needed.

3. Make sure your contract terms apply.

Printing your terms and conditions on the back of your invoice does not make them a part of the contract: they need to be communicated much earlier, at the outset of the contract. For repeat business, your terms and conditions may be incorporated by the nature in which you deal, but if you want to be protected you have to ensure the contract is operating on your terms and conditions which contain the bespoke clauses that you need to protect you.

4. Consequences.

What are the consequences of not paying? To encourage customers to pay you promptly you need to set out the consequences of late payment which may include; ceasing work, adding interest to the money owed, getting your goods back, retaining intellectual property rights in respect of services and requiring the errant party to pay all expenses and costs (whether legal or otherwise) so that you are not out of pocket at all. If you have the terms in your contract (and they are notified at the outset) which protect you, you increase your chances of being paid.

5. Keep talking.

It is not a myth that he who shouts loudest gets paid first, in my experience it is simply a fact of business - if you are constantly pushing to be paid then if there is money to pay you, you will be paid. Continuing to talk during difficult situations can help you understand whether you might get paid and therefore whether now is the time to pull up the drawbridge and stop trading or whether there is a possibility of being paid and the strength of that possibility i.e. probability or just a possibility. If you do have to resort to a legal process to recover your money, the information that you gather whilst continuing a dialogue is important and informs the recover strategy.