Many companies have significant outstanding debts, which may restrict potential growth, and prevent you from reaching your true business potential.
Credit control and debt collection should be a key component in any business. However, in our experience many companies fail to adopt efficient debt recovery working practises, which can lead to disputes with potential suppliers, or in the worst-case scenario non-payment.
A not uncommon situation that we have encountered is where the supplier has supplied goods to a company, which has avoided paying for the goods way beyond the payment terms, and has subsequently entered liquidation. In this case, it will be very difficult for the supplier to recover the whole payment. In fact, since the supplier will be classed as an unsecured creditor, it will possibly be lucky to receive a few pence in any pound outstanding.
The question is how can you minimise the risk of this situation happening to you. You could consider adopting debt collection procedures to check the solvency of your customer which could include:
1. Checking financial and accounting records of the company at Companies House.
2. Conducting a credit check on the company.
3. Undertaking a court and/ or insolvency check to see if any formal court and/ or insolvency proceedings are underway against the company.
4. Checking to see if there is any security including charges registered against the company or its property at Companies House or the Land Registry.
Summerfield Browne Solicitors have offices in London, Birmingham, Cambridge, Oxford and Market Harborough, Leicester.
