At the risk of doing myself out of a job, I am about to give you some knowledge that, if used correctly, should reduce the amount of your customer accounts that go into debt and make it much easier for you to recover the money owed to you from the ones that do go into debt.
If you are a salesperson then this article is mostly aimed at you. If you are a Credit Manager then get your salespeople to look at this!
This is it, THE TIP!
The most important tip I can ever give you is to get a customer’s paperwork right from the very beginning and keep it up to date! No amount of stressing this can ever make this stand out enough.
What does that actually involve?
Right, so you are sat there with a new customer and they are good to go on an order worth thousands of pounds to you. What do you do?
GET THEM TO SIGN A CONTRACT! Make them fill in the details of the company and/or themselves fully, get the registered company number, get the full address, get the details of who the individual is, check that they have the necessary authority to make this deal with you and get them to sign the contract. Once they have done all this, check the information is correct by using Companies House online.
GIVE THEM YOUR TERMS AND CONDITIONS! Do not just direct them to your website, make sure that they have physically seen your Terms. Suggest to them that they read the Terms before making the agreement. Perhaps even suggest that they get a lawyer to look at them. This is vital because if you want to rely on a clause in the Terms (cancellation fees, legal admin charges etc) at a later date you need to be able to prove that the customer was aware of your Terms from the beginning.
This sounds like a lot of fuss …
Yes, it might make the job of selling that tiny bit trickier as form filling is really boring but, trust me, if it gets to the point that the customer will not pay then you need a complete contract to prove that you are pursuing the right company and that they were aware of the Terms of the agreement. If you do not have this then it gives the customer all the wriggle room they need to deny making an agreement, deny that they are the right company, deny that the person who made the agreement had the authority to do so and deny that they were aware of the Terms of the agreement. This wriggle room makes it difficult, potentially impossible, to collect the debt and also expensive if you end up having to go through the Court to try to prove that you do have the right company and they were aware of the Terms. It is so easy to save yourself this heartache.
Keep up to date
As a final note, it is always worth checking with your customers periodically that their details are still the same. New directors are often very good at denying all knowledge of an agreement when they do not fancy paying a bill!