Business to Business invoices can take months to be paid, and statistics indicate that 80 % of start-up businesses fail within the first year. Suppliers of goods and services to new businesses should therefore be wary.

If an invoice is overdue, the creditor is providing credit to your customer. It is therefore vital that creditors have in place an effective system for pursuing debts. Some businesses continue to trade whilst insolvent due to their suppliers’ willingness to provide goods and services on account.

In an ideal world a supplier would never have any outstanding invoices as payment would be made prior to goods being released or services rendered, however giving credit is often the only way to attract business, as a supplier’s competitors would offer credit instead.

In short, if a supplier is going to offer account facilities, it is a case of knowing with who you’re dealing and ensuring that all is done to minimise the risk. It is worth undertaking some work at the outset of a trading relationship as a customer is more likely to give useful information at the time of opening an account as opposed to when the customer is being pursued for an unpaid invoice.

Things to consider undertaking are credit checks, a search of the Register of County Court Judgments, the Insolvency Service website for bankruptcy and voluntary arrangements, obtaining personal guarantees from directors of newly formed companies, bank account details and the principals’ home addresses. This information will assist if court proceedings are necessary.

Maximise profit by claiming late payment compensation and interest on overdue invoices. No longer is it necessary to incorporate terms regarding interest into the contract, a creditor in a business to business transaction is entitled to it by statute. Any extra money recovered may ultimately cushion any inevitable bad debt as no matter how careful a supplier is there is always the unexpected bad debt that arises.

The sooner a debt is chased, the better the chances of recovery. Help is at hand as we are able to advise on the ideal credit control system and can assist in the preparation of personal guarantees, terms of business and of course the collection of overdue accounts. In the majority of cases, if a debt is recovered in full, all your court costs and solicitor’s costs will be recovered from the debtor.

For a no obligation discussion as to how we can assist your business, contact Robert Jerome on 01723 352125 or email robert.jerome@pinkneygrunwells.co.uk and start to reduce the risk.