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HOW TO REDUCE THE RISK OF BAD DEBTS

Bad Debt

In the first three months of 2019 there was 35,779 County Court Judgments issued against UK companies, with a total claim value of £107.2 million. 

According the Registry Trust the number and value of Judgments has been increasing over the last three years.  However, in context, the number and value of Judgments is still a lot lower than during the financial crisis 10 years ago.

Here are some of the strategies you could implement to try and reduce the risk of getting bad debts:

  • Payment up front (this is the best option if possible and what Mercian Law request.)
  • Obtain up to date company reports on all your customers and suppliers, and monitor them throughout your business relationship. You will quickly pick up those that are showing signs of financial issues.
  • Have a robust credit control process and stick to it, no exceptions. It is proven that the sooner you take action the more likely you are to recover the money owed to you.
  • Personal guarantees from company directors. These are a must when dealing with companies that are newly incorporated and not yet proven themselves financially.

Sometimes, with the best of procedures, bad debts can arise.  Always seek some initial advice on how best to proceed. 

You can contact Mercian law via our live chat feature on our web site, or by calling 01827 215679.

Posted by Verity Grigg

07/06/2019

Bad Debt