When considering what advice to give in recovering outstanding debts or debt collection generally it is wise to consider the old proverb, "prevention is better than cure" Trite but true.
Debt recovery, cash collection and aiding your cash flow are always going to be easier if you have established before you extend credit EXACTLY who you are dealing with and what they have in terms of asset.
When considering offering a credit account is is vital to know whether you are dealing with, for example, B Baggins & Co Limited (purely a management company with no assets whatsoever), Bilbo Baggins & Nephew Limited (a non-trading company) or B Baggins (The Shire) Limited that has very healthy accounts on file and included amongst it's large assets is one very shiny, (highly transportable and easily converted into cash by High Court Enforcement Officers) ring.
How do you know who you are dealing with? The answer is painfully obvious. Ask them.
Make sure that any new customer THOROUGHLY completes an application form. I see many perfectly good application forms that are only half-completed where a rep has been eager for the sale (but not necessarily for payment) and missed the opportunity to find out exactly who is being contracted with.
If you are dealing with a limited company, get their registration number. It is also useful to ask for headed paper that must display a company registration number. That way no matter how many times they may change their name you will know precisely who you will be dealing with. Once you have established who they are, take a look at their accounts filed at Companies House. Accounts are easily accessible via our online shop http://www.creditserve.co.uk/Online-Shop
If you are not happy with the accounts filed, don't be afraid to ask the directors questions about the company or their past businesses and experience or seek Personal Guarantees from them. If they are not happy to give them, ask yourself the question; if they are not prepared to take any risk on behalf of their company then why should I?
It is true that even companies with the best and most exhaustive credit checking and credit control procedures will incur bad debt from time to time but when planning your debt collection procedures the best place to start, as Julie Andrews would say, is at the very beginning.
Please come back and visit my blog for tips and advice on commercial debt recovery, insolvency and credit control.