Businesses of all sizes rely on a steady stream of new customers to safeguard and expand their operation. Depending on the size of your business you will have sales people, a sales manager, even a sales force or you may just make a few sales calls yourself when you get the time. Whatever your position is within your business, you might be the receptionist, a sales person, the sales manager, the managing director or work from home running your own business, there is no better feeling than when you answer the telephone to a new customer who is calling to place an order or agree a contract.
How to Avoid Future Commercial Debt Recovery
New customers are what business is all about, you spend a lot of time and money on finding them, and giving them a great service. Now you have a new customer and you know what they would like, when they would like it and where they would like it delivered to, but do you really know who that new customer is?
To avoid payment issues and the possibility of future commercial debt recovery action and even bad debt, it is vitally important that you know exactly who you are dealing with. Is the customer using a trading name, if so what’s the true legal identity of the company you are supplying, who are the Directors and what is their financial positional.
If you don’t find out this information at the start of your trading relationship you will be at a disadvantage should the relationship breakdown. You may find that if payment for goods or services supplied is not received as agreed and on time, you simply do not know who is responsible for the non-payment and who to take action against.
5 Simple Steps to Avoid Commercial Debt Recovery
Before you deliver any goods or services to a new customer, we recommend you complete the following precautions:
- Are you sure of the exact trading style and name of the business you intend to do business with? Common types of business can be limited companies, sole proprietorships or partnerships amongst others.
- If your new customer is a limited company, the Directors details and company address will be available via a simple Companies House online web check. However, if the business is not a limited company, you should ask directly for the proprietor or partners personal details in writing.
- Have you received a purchase order or written order on headed paper. If not ask for this as either should clarify the legal status of the business, by providing either a limited company registration number or the proprietors name and address.
- Take up credit references to check new customers’ credit status and payment history. If a new customer is unable or unwilling to supply contact details of suppliers they use as referees, further checks should be made in to the credit worthiness of the potential customer.
- Dispatched orders or carry out the work agreed only after receiving a written or printed order, and ensure the trading style and details of the business match those of the original account.
Top Tips to Avoid the Risk of Future Debt Recovery
Confirm and check the exact legal status and trading name of the business you intend to supply. If the business is a partnership or sole proprietorship, check and confirm that you have the names and private addresses of the business owners. If future recovery of commercial debt is required it will be the partners or proprietor of a non-limited business who will be liable and who will be pursued.
If the new customer is operating as a limited company and you intend to extend a significant amount of credit, consider asking the directors of the company to personally underwrite the debt by way of a personal guarantee. This allows you further recourse should the company enter receivership or bankruptcy.
Do not be reluctant to ask for all of the information you need. Your potential new customer should be as keen as you are to build a long term working relationship, and if they are reluctant to supply relevant information then there may be reasons not to extend credit or supply services.