Debt Recovery Blog: More excuses - Further Hints and Tips for Chasing Debt

We briefly addressed the most serious reason, which is cash difficulties and will now concentrate a little further on that.

Getting Money From a Business that's Struggling

If you suspect a cash problem it is perfectly reasonable to ask the client directly if they are experiencing difficulties. You may be surprised how candid the reply is. The answer then has to be seen in context of the client's credit worthiness and the very next step should be to run an up-to-date credit report.

It is more likely that the smaller the business, the more open they will be and it is also more likely that they may well be living “hand to mouth” but that doesn’t require an overreaction.

Many small to medium businesses will be dependent on large payments from certain clients and if they are being treated badly in the short term by an unfeeling multinational then the cash flow difficulty may just be a blip which doesn’t indicate a business in severe difficulties. 

Understanding When to Push for Payment and Not: The Relationship

Through a healthy relationship, business to business, you will have much greater insight into when to push for payment and when its better to hold off. Again the key to this is to build up the relationship and try to get close enough to the client to judge the veracity of their claims... 

And then have a very good look at their balance sheet!

The key here is working capital and convertibility into cash. Essentially if their working capital (current assets less current liabilities) is negative, then the problems could be very real and even a positive working capital has to take into account levels of debtors and stock.

Yes, that sounds complicated but you can always simply take a view on the business’s credit rating, but again be very careful. Many of the cheaper agencies currently operating provide particularly unrealistic and thoughtless ratings.

Also have a good think about the sector they are operating within. Is it an area which is struggling within the present economic climate and could their difficulties be related to this. 
So what is the next stage? This is where your skills of judgment and negotiation come into play but next time we will look at how to ascertain the possible difficulties at a larger business.

If you are having any trouble chasing debtors, getting invoices paid or improving cashflow in your business because of debtors putting off payment, call Colemans-ctts Solicitors Debt Recovery Team now on 0808 155 9070 or make an online enquiry to find out how we can help you collect your debts and take away the stress of chasing your money.