Waters & Gate discuss prevention vs intervention in reducing bad deb
With the global economy inching closer to recovery but the casting shadow of the European financial crisis still at large, businesses in the UK have a difficult balancing act to ensure business growth. On one hand, directors have to be focused on increasing revenue, opening up new income streams and selling into new markets. However, have they considered how they are going to manage this new cash-flow? The strain this can put on the skeleton staffing levels, business processes and how much of this new cash-flow they can realistically capture.
Whether a business decide to fix the whole roof or buy more buckets to help catch the water, either way, not reacting or having insufficient credit management processes in place is a risky business, potentially leaving you flooded with bad debt. This article will highlight simple techniques and step that a business can take to increase cash-flow and support future growth.
Prevention or intervention, that is the question?
Preventing bad debt in the first incidence is naturally the best way of reducing business risk. At Waters & Gate our prevention techniques are spear-headed by our consultancy service. We engage directly with businesses, reviewing the full sales to payment life-cycle. This involves identifying potential points of failure within the credit management process.
Areas frequently requiring improvement include:
- No or insufficient credit checking facilities
- Poor terms of business
- Not insisting on a purchase order (especially critical when transacting with corporate clients)
- Inadequate dunning systems
- Unaware of late payment entitlements (Late Payment of Commercial Debts Act 1998.)
Through simple process changes businesses can significantly reduce the risk of bad debt. This in turn will put less strain on the business, collection teams and will ensure that the organisation can invest and focus on growth. Waters & Gate also discover that many businesses are unaware of their entitlement under the Commercial Debts Act to charge for late payments.
By law companies can claim compensation for late payment at the following rates:
- £40 for debts up to £999
- £70 for debts between £1,000 and £9,999.99
- £100 for debts more than £10,000
Asides from consultancy, Waters & Gate also offering credit control training and recruitment
The training courses are delivered in three different formats including full day, lunch-bites and online.
- Introduction to Credit Control
- Advanced Collection Techniques
- Creating an Effective Dunning Process
- Credit Control for Managers
- Legal Essentials
Increasing efficiency of the collection team through training or recruiting highly skilled staff, it is vital that you have the upper hand when it comes to credit control.
It is inevitable that occasionally every business is going to have an issue with bad debt. At Waters & Gate we have efficient systems in place to react quickly and chase debtors immediately. Any delay in chasing debtors significantly increases the risk of late or no payment.
The core intervention services include an award winning collection team and the innovative 360 Collections solution, drawing on a panel of debt collection agencies vetted on industry, market and geographical knowledge.
Through outsourcing the collections to a debt collection agency you can utilise years of experience, but also take advantage of a no collection, no fee policy, meaning if the debt isn’t collected by the agency your business pays nothing. This cost effective method of debt collection can really support a business and help maintain a stable cash-flow. Waters & Gate also pass on many of their collection costs to the debtor so the full invoiced amount is collected and returned in full.
The expertise, experience and market knowledge of a Waters & Gate go far beyond the traditional perception of a debt collection agency. Having the support of a specialist partner can truly bolster a business, increase cash-flow and ensure that a business has the fuel to grow.