HOW TO LIMIT NON-PAYMENT RISKS?

Bad payers and unpaid debts can be a real problem for your business. Unfortunately, almost all commercial institutions have to deal with this issue, but surprisingly few introduce measures to prevent non-payment risks. TCM reveals a few basic rules you should consider following automatically.

Know your debtor

Major companies operate with credit limits per client (debtor) and many small companies do so as well. This limit is the maximum amount of debt that a client can have towards you. If they want to purchase more, they will have to pay their outstanding invoices first. These limits are set according to the client’s apparent solvency (i.e., for a company, its financial health as indicated by its last three balance sheets available free of charge on the BCE website) and the creditor’s specific rules (i.e., for consumers, a maximum limit of €X if no significant information can be found on their financial health). Of course, it’s vital to clearly and correctly identify your debtor including their name or company name, their business id number and the name of the person responsible with whom you signed a contract (for businesses), address, phone number, e-mail address, website, and any other details that could be useful to you should a problem arise (not only payment problems).

Draw up a watertight contract

Any provision or delivery should be preceded by a written order in order to avoid any subsequent misunderstandings. This order should be clearly linked to a contract or to your general sales conditions. In case of any dispute and/or non-payment, it is essential that your client has signed this contract or that you can show that they have clearly accepted your general sales conditions. There are useful contractual clauses that allow creditors to anticipate the non-payment of a receivable by one of their debtors. While they won’t directly prevent non-payments from occurring, they are still an effective way of preparing for a possible payment default. As well, it’s particularly important for your contract to specify the payment period, as payment will be considered to be late from the after the date indicated.

Invoice promptly

To sum up, legislation stipulates that you should invoice no later than the 15^th day of the month following that of the delivery and/or the service. However, notwithstanding some exceptions (generally major purchases such as a car or construction), you shouldn’t issue an invoice to a private individual who will be making private use of your products or services. Many companies invoice systematically at the end of the month. However, for one-off (non-recurring) services provided to private individuals or small businesses, it’s advisable to invoice immediately after the delivery or service. Your client will then most likely pay faster or dispute the invoice, which is also useful to know at an early stage. A small tip to reduce your dependency on regular mail: send a digital version of the payment document so that your debtor receives it straight away.

React swiftly in the event of non-payment

If, despite the various steps taken to limit the risk of unpaid debts, your debtor exceeds the payment period, it’s best to react at once rather than letting the situation drag on. In this regard, you can call upon the services of a specialist recovery company that will chase your debtor immediately by phone, payment reminder letters and visits to their address. Many methods can be used, but the key factor is acting quickly. For more information, see our credit management guide.

HOW TO LIMIT NON-PAYMENT RISKS?

Bad payers and unpaid debts can be a real problem for your business. Unfortunately, almost all commercial institutions have to deal with this issue, but surprisingly few introduce measures to prevent non-payment risks. TCM reveals a few basic rules you should consider following automatically.

Know your debtor

Major companies operate with credit limits per client (debtor) and many small companies do so as well. This limit is the maximum amount of debt that a client can have towards you. If they want to purchase more, they will have to pay their outstanding invoices first. These limits are set according to the client’s apparent solvency (i.e., for a company, its financial health as indicated by its last three balance sheets available free of charge on the BCE website) and the creditor’s specific rules (i.e., for consumers, a maximum limit of €X if no significant information can be found on their financial health). Of course, it’s vital to clearly and correctly identify your debtor including their name or company name, their business id number and the name of the person responsible with whom you signed a contract (for businesses), address, phone number, e-mail address, website, and any other details that could be useful to you should a problem arise (not only payment problems).

Draw up a watertight contract

Any provision or delivery should be preceded by a written order in order to avoid any subsequent misunderstandings. This order should be clearly linked to a contract or to your general sales conditions. In case of any dispute and/or non-payment, it is essential that your client has signed this contract or that you can show that they have clearly accepted your general sales conditions. There are useful contractual clauses that allow creditors to anticipate the non-payment of a receivable by one of their debtors. While they won’t directly prevent non-payments from occurring, they are still an effective way of preparing for a possible payment default. As well, it’s particularly important for your contract to specify the payment period, as payment will be considered to be late from the after the date indicated.

Invoice promptly

To sum up, legislation stipulates that you should invoice no later than the 15^th day of the month following that of the delivery and/or the service. However, notwithstanding some exceptions (generally major purchases such as a car or construction), you shouldn’t issue an invoice to a private individual who will be making private use of your products or services. Many companies invoice systematically at the end of the month. However, for one-off (non-recurring) services provided to private individuals or small businesses, it’s advisable to invoice immediately after the delivery or service. Your client will then most likely pay faster or dispute the invoice, which is also useful to know at an early stage. A small tip to reduce your dependency on regular mail: send a digital version of the payment document so that your debtor receives it straight away.

React swiftly in the event of non-payment

If, despite the various steps taken to limit the risk of unpaid debts, your debtor exceeds the payment period, it’s best to react at once rather than letting the situation drag on. In this regard, you can call upon the services of a specialist recovery company that will chase your debtor immediately by phone, payment reminder letters and visits to their address. Many methods can be used, but the key factor is acting quickly. For more information, see our credit management guide.