13th September 2021

Are your debtors giving you the run-around? Red flags and how to deal with them

How to overcome risky debtors

Across our business we have a wealth of experience dealing with our clients' debtors. From small one-man-bands to multinational companies, it’s important to keep on top of who owes you money as well as which customers you love to deal with vs which ones give you trouble.

We’ve seen it all and it’s made us experts at recognising the warning signs that indicate you might be about to encounter issues. Excuses, broken promises, unjustified disputes, customers who are difficult to contact and gradually stretching terms are all classic signs of trouble ahead!

Businesses don’t fail due to lack of profit, they fail because they run out of cash and non-payment of invoices is one of the primary reasons for that lack of cash. It is vital that you have effective credit management to ensure your hard work turns into cash in your bank account and not just a profit figure on a set of accounts!

Some quick wins to keep you ahead of the game:

Perform credit checks to ensure you’re offering credit terms appropriately. Use a reputable company to perform credit checks and ensure you’re extending credit to the right businesses before you start trading.

Send accurate invoices out in a timely manner. Set the standard. An accurate invoice means less dispute and reason for delay. Getting the invoice in on time further reduces the likelihood of a delayed payment.

Keep in regular contact with customers even before their invoice is due. It’s much easier for a customer to ignore a faceless organisation than the person they talk about the football with. Keeping regular communication will also let you stay in the loop of what’s going on with your customers’ businesses and give you a head start to ensure any potential issues are addressed in plenty of time.

Reassess customer’s terms on a regular basis. Doing this will mean you are always offering the right credit terms to the right people. This allows you to be more lenient on businesses that you trust, encouraging trade, and keep yourself safe from potential credit issues.

Ensure your paperwork is robust. Making sure everyone is on the same page (pun very much intended) will help avoid disputes and queries arising at the due date for payment.

Be prepared to put a customer on stop if necessary. It may sound harsh, but you need to look out for number one. Sometimes a temporary stop in trading is what a business needs to allow them time to get themselves into a better position.

Leave it to the experts and focus on running your business. Let us help reduce the admin needed to stay on top of your debtors. Our full factoring facilities include the use of our dedicated and highly experienced credit control team. We can stay in touch with your customers on your behalf, creating a trusted relationship and ensuring that you get the money from your sales on time. Doing this allows you to keep your sales dialogue positive, whilst we handle any difficult discussions regarding payment.

At Optimum Finance, we utilise innovative technology to offer a range of flexible funding solutions, which grow alongside your business. Get an instant quote for the amount of funding you could access by entering your annual turnover into our finance calculator. Products include invoice discounting and factoring that can boost your cashflow and give you access to a dedicated credit control team.

Email or call us to speak to our experienced team of experts and find out how invoice finance could help your business. We pride ourselves on getting things done quickly and providing access to cash within 24 hours of approval. We are passionate about finding solutions and delivering to clients’ needs.