Having trouble getting paid?
‘Can’t pay’ v ‘Won’t pay’
When recovering debts, differentiate those who “can’t pay” from those who “won’t pay”.
A quick response is always important. A friendly visit often works – knowing that you have to see the creditor in the street is a good incentive to pay.
But is a “pay now” response best? You are not a bank but if the debtor goes bust the chances of being paid drop.
Consider some of the following
- Charge interest. Charge for recovery costs.
- Set up a payment plan. Set fixed dates for payment, give a reminder before the due date and follow up if payment is not received.
- Offer a discount for full payment now.
- Take extra security eg a guarantee.
- Agree to take goods or services in payment of your debt.
- If you are supplying credit, reduce or stop the limit and go to cash terms.
If your debtor pays you but then goes bust, there is a risk of a liquidator taking the money back. For larger debts, speak to your advisor early, as there are important steps to take to reduce the risk of “claw back”.
If you are worried about being paid or paying your creditors I am happy to have a free initial 30 minute meeting to discuss your options.