Every business experiences the
problems of obtaining payment for invoices. Smaller firms tend to fall victim
to large companies and often feel that there is not a lot that they can do
about it. It is not unusual for small businesses to be kept waiting six months
for their money - excuses of missing paperwork or non-delivery being the
norm.
Prudent businesses follow a set procedure when invoicing their
customers:
- Accept orders in
writing only or by email or fax.
- Send out an order
confirmation to the customer.
- Ensure good
quality checks prior to shipping goods.
- Ship the goods on
time.
- Pay detailed
attention to packaging to ensure delivery in good condition.
- Use reliable
shipping/transport methods.
- Obtain Proof of
Delivery (POD).
- Include detailed
delivery note with the goods.
- Forward an
immediate invoice.
- State clear
payment terms on the invoice (Net Monthly or Net 30 Days etc).
- Have clear
terms/conditions of sale printed on the reverse side of the
invoice.
- Forward monthly
statements to the customer as appropriate.
- Initiate debt
recovery when the payment terms are breached
The difficulty for most businesses is
to determine the best time to initiate debt recovery. There is the difficult
balance to strike between customer goodwill and the essential requirement to
collect funds and support cash flow.
Putting aside the commercial
considerations, once the terms of sale are breached the supplier is legally
entitled to commence recovery proceedings. Of course, if there has been a
genuine problem with quality or delivery the supplier must exercise caution and
provide a remedy to the customer.
When commencing recovery proceedings
the supplier should assemble as much paperwork as possible. The usual excuses
for non-payment are that the goods are not of a saleable quality or late
delivery. These excuses can be easily disputed by good documentation confirming
inspection of the goods prior to shipment and a signed POD with a printed name
as well as a signature.
It is also prudent to have good witness
statements from staff members.
Most claims for unpaid invoices are not
defended and judgment in default is usually obtained. Accordingly, it is a good
idea to have an enforcement option in mind. Where previous payments have been
received copy cheques with the customer's bank details should be retained or
requested from your bank - this with a view to implementing a
Third Party Debt Order. If the
Defendant is a limited company the address of the Registered Office should be
used for the service of proceedings but enforcement with a
Warrant of Execution may need to
be actioned at the address where the main assets are held.
If you are
now ready to commence proceedings please go to our
Submit Form and complete the required
details. |
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