If you run a business and extend credit you always have the risk that a customer doesn’t pay you. You manage this risk through good credit control but sometimes even then you can still be hit by a bad debt. We had a client recently who came to us because a customer had gone into administration. Whilst we were happy to offer free advice on how to proceed, one call to the administrator confirmed it was a lost cause.
This was not a big debt - £1800 - and it happens. The interesting point though is how the debt grew. The client had a reasonable credit control policy but decided in this case not to follow it. A couple of months went by and the debt grew and what was £600 per month on an invoice became £1800. The client had not been disciplined or aggressive enough. Service should have been withdrawn earlier and at least then the exposure would have been limited.
We always recommend that a business reviews its aged debtors weekly and then takes action to remedy. The current economic environment makes this even more necessary. This is good credit control and ensures constant monitoring. Neglect and a lack of discipline are every slow payers dream. Don’t let bad debt happen to your business.