Every business faces the challenge of collecting payment from non-paying clients and customers. This can have the potential to ruin your business, since you can’t always pay your own bills when you are waiting on money that never seems to be coming. Not to mention that it also prevents you from gaining that bit of extra cash to allow your company to grow and expand. As such, a successful business will usually have an effective credit management process in place, which relates to the accounts receivable (debtors) section of a business’ balance sheet.
• Establish collection and credit policies in writing and ensure your staff and clients are clear on the details.
• Complete credit checks on all new prospective clients applying for credit.
• Frequently age your accounts, and get an independent examination of the report.
• Go over the credit transactions and write-off bad debts.
• Ensure policies are carried out for the following-up of accounts that are overdue.
• Reconcile trial balances with general ledger accounts.
What to do when customers don’t pay
• Constantly review your accounts and invoice quickly
• Call regularly to chase up the debt
• Don’t get angry or lose your temper when recovering payment
Inevitably, there will usually be that one client who doesn’t pay and continues to make up excuses that you know are false. If you have exhausted all of the above solutions then you are well within your rights to take legal action against the non-paying client. It is important to seek professional advice when taking legal action. A lawyer will be able to assist you with all stages of this process – from issuing a statutory demand letter, to holding a court case.
Here at The Quinn Group our experienced team of lawyers and accountants are able to assist you in managing your accounts receivables. Our accountants can assist with your general cash flow issues or other accounting needs, and our lawyers can assist you to recover your money through legal action. For more information submit an online enquiry or call us on 1300 QUINNS (784 667) or on +61 2 9223 9166 to book an appointment.