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What can I do to reduce the risk of not getting paid? Across a broad spectrum of sectors, from manufacturing to service industries, the issues that arise in terms of non- payment change very little from day to day. There are a number of things you can do to minimise


the risks associated with getting paid, or to help you get paid when a debt is outstanding: 1. Know who it is you are doing business with from the outset. Do you have a credit application or new customer application form? If you do, use it and clear up any ambiguities about who it is you are dealing with. You have access through the Companies House website (www.companieshouse.gov.uk) to search any limited liability company. You should use this facility to check the legal status of such customers and ensure that they are complying with their statutory obligations as a company. Ask for a copy of the letterhead of your customer for your records, and for the full names of individual customers or partners in non-corporate legal entities. See if the customer will provide you with their bank details, so that you can clarify the legal standing of your trading partner. If they do not do so, but you later get a deposit payment or settlement of an early invoice, then make sure you keep the details of the paying customer on file. 2. Seek out information about your customer and keep this on file. We all recognise in business, especially when establishing new relationships, that generally customers love to talk about themselves. They will often tell you more anecdotally about their business at the outset of a relationship than at any other time. If you try to gather such information about your customer once they have stopped


It’s your money and you’re entitled to ask for it – normally in this world, if you don’t ask, you won’t get


paying you, suddenly the silence will be deafening. So do not be afraid to make contemporaneous notes about other projects your customer is working on, who else they do business with, and what assets they have that they might inadvertently divulge to you. You never know when this information may come in useful. 3. Know and agree terms of business before you do business. Sometimes, in the rush to secure new work, we can all be guilty of being blinded by the commercial benefits that work might offer us rather than reviewing the commercial risks it may present. If you are proposing to provide services to a customer on your terms of business, then you have to ensure that your terms of business are made known at the time of entering into an agreement to do business, and before you start work. Providing terms of business on the reverse of an invoice, for example, affords you no protection at all. The relationship or contract you enter into, whether verbally or in writing, has already been reached long before the invoice is ready to be sent out. Always try to provide a clear written estimate of the work you propose to do and the costs associated with such work. Always try to have a clear mechanism in place regarding extra works related to the contract, and ensure everyone within your organisation is familiar with it and adheres to it. If the contract provides for stage payments, then set


this out in writing; also, set out the consequences for any breach of that contract so far as it relates to payment. If you enter into a fixed price contract, then your ability to withdraw from site can be seriously impaired if there is no provision for stage payments and, likewise, no provision within your terms and conditions that allow for


60


ECA Today September 2011


SHUTTERSTOCK


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