7 Ways To Avoid Bad Debt

Riskdisk helps thousands of companies to avoid bad debts by allowing them to check the credit status of all their customers.

However, if you’re not yet using our system, the next best way to protect yourself is to use the following guidelines.

We hope you find them useful.

www.riskdisk.com

7 steps summary

1. Don’t assume…They’ll be O.K. After all, they are a limited

company/PLC.

We’ve heard they’re doing really well.

They’re massive.

They’re part of a huge group.

1. Don’t assume…They’re a household name. (The most frequently

checked companies are the largest)

Just look at their prestigious address - even the building

is named after them.

2. Be confident…You have every right to ask:

1. Who/what are you dealing with?

2. Where are they located?

3. Do they have the money to pay?

4. Are they prepared to part with it

promptly?

If you give credit to a customer, you are investing in their business.

3. PaperworkCustomers should always fill out a credit application

form that includes your terms of trading. Ensure that:

They are presented in fluent, unambiguous English.

They apply to all sales.

They include a Retention of Title clause.

They stipulate when payment is due.

3. PaperworkThey supersede any terms imposed by the

purchaser.

They define the point at which ownership (and risk)

passes from you to your purchaser.

They state any interest you wish to charge on

overdue accounts.

4. Get the name rightCheck spelling

Get it typed, not handwritten

Don’t be tempted to shorten names in

correspondence

Don’t be fooled by a fancy name [Trotter’s

International Traders Ltd?]

5. Check the addressMake sure that all addresses completed on your

application form are legible.

Beware residential addresses, check suitability with line

of business.

PO box number and town = extreme caution.

Don’t forget a full postcode.

Beware of ex-directory listings.

6. Phone them…Beware phones that are:

permanently serviced by answering machines.

never answered.

permanently engaged.

answered merely with a number.

answered with only a “yes” or “hello”.

answered with a different name altogether!

7. Check their age…Note that:

40% of all businesses fail within 2 years

New companies are often most stretched after 5

months, when the initial capital typically begins to run

out

Financial information on new limited companies may

not be published for 22 months

7. Check their age…But young doesn’t mean unreliable. However, if there

is no financial history, you may want to insist on:

A guarantee from one or more of the directors.

A guarantee from the parent company (if there is

one).

A guarantee from the ultimate holding company (if

there is one).

The best bet is to check the credit of every customer with a reputable credit agency.

Visit us at www.riskdisk.co.uk or call us on 0844 473 0054 to find out how easy and affordable it can be.