In our latest series, Do you know your Debtor, Laura Charles examines the must-know info when claiming from a debtor.
This week, there are some things to consider before starting a claim – ID, money on account and payment terms
To try and put yourself in front, do you ask for ID when a new customer/client approaches you? How do you check the address they have given you? Do you get references from other businesses? Do you make use of Companies House or a credit search facility? Do you have a process to ask for a driving licence or passport and utility bill for directors and sole traders?
In some industries you are legally required to verify the identity of your customer or client. However in many cases it is good business practice to do this even you are not legally obliged. It is a good idea to have a client on-boarding process in place to gather and check this information especially if you have high value orders.
Although perhaps not appropriate for all businesses, do you, or should you ask for money on account or money “up front”?
This will go some way to covering the work you are doing and is also helpful should you need to take enforcement action further down the line as you will have their payment details on record.
Finally, who’s terms are you paying on? Yours or theirs? You may want payment in 30 days however some companies pay on their terms. In some cases it may suit you to adapt your payment terms but in other cases it may not and you should ensure your customer/client is reminded of the terms on a regular basis. Having the terms detailed on your invoices can be no excuse for non-payment!