1. Credit Insurance Consider taking out credit insurance to cover you bad debts. CLICK HERE

2. Debt Recovery Fee reimbursement Make a provision in your terms and conditions that "all debt collection fees incurred in recovering overdue accounts will be added to the overdue invoice amount" This means are fees may be recoverable and effectively means free debt collection for you the creditor.

3. Interest Add a provision to charge Interest on all overdue amounts. Keep the figure reasonable as excessive charges can be challenged. You can automatically charge interest under The Late Payment of Commercial Debts (Interest) Act at the rate of 8% above base rate, and against personal debts at 8% flat under The County Courts Act.

4. Retention of Title Goods (not Services) If your goods are easily identifiable as supplied by you, you should have a condition of sale which makes these goods your property until paid for in full. You can then recover them at any time, but especially when a customer is in difficulty.
You should notify all your customers of the new clause and make sure it is simple but clear. An 'All Sums Due' clause allows you to recover your goods against any monies owed to you, not just the debt for the goods recovered.
Please note "Retention of title" clauses are not appropriate if your goods are to be processed or incorporated into another product. They also need very careful wording so they are appropriate to your business. It is advisable to seek legal help in drafting.

5. Contra and Offset Against Payables If you have debtors who are also suppliers, you cannot just withhold payments to them because they are overdue to you. The contracts are separate. Have a simple written agreement with common customers/suppliers that debts may be offset, and any excess paid by the party concerned.

6. Credit Check. Credit checking your prospective new customers is vital. This will show up any past debt problems they have had including County Court Judgements. We offer a very cost effective and comprehensive credit search for our clients. CLICK HERE for more information

7. Payment direct to your Bank. Offer or insist that payments are made directly to you bank account. You may have to cover any fees on behalf of your customer but it removes the excuse "its in the post" and saves time.

8. Personal Guarantee. When dealing with limited (LTD) companies consider asking the directors for a personal guarantee. This is a bit cheeky really but many companies inset on it. If the LTD company fails to pay its debts we can pursue the directors personally, meaning a much better chance of a successful recovery.