CREDIT CONTROL - SEEK HELP AT AN EARLY STAGE

CREDIT CONTROL - SEEK HELP AT AN EARLY STAGE
The old adage "Cash is king" has never been as apt as in the current economic climate. Bankruptcies and insolvencies are increasing and it is important to ensure that you do not contribute to those statistics. Here are some suggestions which might help you to achieve this:
• Make enquiries into the finances of new customers before you contract with them. You could require Cash on Delivery initially or impose a credit limit. For larger contracts, seek guarantees;
• Review your terms of business - these set out the basis on which you will get paid. Allowing debtors generous credit terms could seriously impact on cash flow. Consider including a Retention of Title clause so that title to goods only passes on payment. This will generally allow you to recover your goods in the event of non-payment or insolvency of the debtor;
• Chase debts as soon as they are overdue. A solicitor's letter often has more impact. For undisputed debts, you can serve a Statutory Demand (on individuals) or present a Winding Up Petition (against a company). Failure to respond promptly to these can lead to an Order for the Bankruptcy or Winding Up of that debtor. However, these methods are not suitable for disputed debts;
• Deal quickly with incoming demands for payment - failure to do so is increasingly followed by a Statutory Demand or Winding Up Petition and an attendant costs liability;
• If you are in financial difficulties, seek help at an early stage to avail yourself of the broadest range of options before it is too late to do anything. Trading whilst insolvent can result in serious charges of wrongful or fraudulent trading.

This article was kindly submitted by Matthew Wiggetts of Weightmans LLP, specialists in Commercial Dispute Resolution

The old adage "Cash is king" has never been as apt as in the current economic climate. Bankruptcies and insolvencies are increasing and it is important to ensure that you do not contribute to those statistics.
Here are some suggestions which might help you to achieve this:

Please note that these ideas are intended to inform rather than advise and you should always obtain professional advice before taking any action