Whether you’re a start-up or a long-established business, get to know your customers before and during your business relationship with them.
Why wait until there is a problem and you have several thousands of pounds of unpaid invoices before you find out that your customer has no way of paying you?
Here are 5 tips to help you know your customers.
Tip 1
Is your customer a limited company, sole trader or a charity? What type of business are they?
If your customer is a limited company check Companies House. Have a look at its financial history. Are their accounts up to date or late? How long have they been established? Have they had many directors? Have they filed their accounts on time or do they late? Are there any red flags in relation to your customer’s solvency?
If your customer is a sole trader, where are they trading from? Do they own that property?
If your customer is a charity, confirm that they are genuine by checking the charity’s name and registration number on the government’s Charity Register.
Tip 2
Who have you been contacted by?
Can the person that you have been speaking to make decisions on behalf of the business?
If the person that you are speaking to is not a decision maker, the business may refuse to pay you or make it difficult for you to get paid.
Tip 3
Speak to your customer. Ask them how their business is going. Show an interest in what they are doing. Is your customer doing well or are they taking risks. Are they struggling?
Tip 4
Purchase a credit report for your customer so that you can check their financial history more closely. The report will provide a credit score and it will also let you know whether the business already has County Court Judgments (“CCJ”).
Please remember that most credit reports show the financial health of the company for the previous 12 months. So if you are concerned about your customer’s finances, you may wish to consider ordering an advanced reports that can also predict the solvency of a business 12 months in advance.
Tip 5
Make sure that you have properly drafted legal agreements in place with your customers so that everyone is singing from the same song sheet. This way, there should no ambiguity. Your client should know exactly what service you will provide and how much that service will costs.
Do not forget to adjust your agreement with your customer if you start to offer additional services that are not covered by the terms agreed.
You can download our free guide here.
How we can help you
Johnson May are debt recovery solicitors and we offer low fixed fees to help our clients get invoices paid.
We are based in Beckenham, London but we service clients throughout England.
Our debt recovery process follows an approach that champions communication to recover payments swiftly for our clients.
Make a free enquiry
Call us on 020 8150 7171, email [email protected] or complete a Free Online Enquiry for a free, no-obligation discussion and let us explain your legal rights and options.
