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Policy & Compliance


customer, but that is a commercial decision for you to make and will hopefully not be something that happens too often. It is recommended that Members review how they go about chasing


monies to see whether it can be improved upon. Areas to think through include: • Consideration as to how your documentation can be made more professional. Small things like ensuring that a due date for payment is clearly stated on your invoices and your bank details are helpful.


• Start chasing money before it is due, not when it becomes due. A week before the invoice is due for payment, make the customer aware that you are expecting payment to be made on time.


• Use emails. In the EFTA’s experience, these are the most effective way of pursuing payment. If you telephone a company asking to speak to “accounts, please”, assuming that there is somebody there to take the call, you are often put through to a voicemail or advised along the lines of that “Accounts only take calls between 2 and 3 on a Thursday, please call back then”. Both very frustrating. An email can be sent at any time and, as opposed to a telephone conversation, it is a matter of record which might be useful at a later stage.


• Set firm deadlines for payment or a satisfactory response. For example, we suggest advising: “We require payment by close of business on such a date”, rather than “We require payment within seven days”. A firm deadline helps concentrate the mind of the debtor. Also, ask for confirmation of their payment intentions by return of email. To a credit controller, it


BIFAlink


is always a thrill to get an email response advising that payment is being made.


• Remember your BIFA Standard Trading Conditions. Provided they have been incorporated properly, and in the right circumstance, be prepared to exercise a lien, where appropriate.


• In these difficult times, consider accelerating your accounts collection process. By this we mean that if you do not get a satisfactory response to your initial request for payment, set a second short deadline of say three days for it to be dealt with rather than the customary seven days. Then, if you still do not get any joy, consider immediately implementing recovery action. EFTA believes that action such as putting the account on hold – with a warning that if payment is not received within say three days, the credit facility will be cancelled and recovery action started – very often ensures a favourable outcome for the creditor.


• If you make a threat, be prepared to carry it out and do so promptly. A lot of debtors do not take threats of further action seriously and seem to think that there will be a series of threats issued before anything will, or indeed might, happen. The old mentality of “we only pay when we get a red letter” still exists. Once your deadline for action has been crossed, you need to do something to show that you mean business.


• What action can you take? You could instruct a third-party debt collector, or you could issue legal proceedings once you have fulfilled the Letter Before Action criteria. It should be remembered that legal action should be a last resort as it can involve considerable outlay, can be used as a delaying device by the filing of a spurious defence and, in all honesty, the outcome is unpredictable. There is a saying that ‘litigation is a mug’s game’ and it is right. If your own account collection has not succeeded, an alternative to the legal route may be to employ a competent third- party debt collector. The arrival on the scene of a third-party debt collector can concentrate the mind of the errant debtor.


• Be prepared to be flexible. If your customer admits that it has a financial problem, see whether you can agree on a payment proposal that you can both live with. You cannot have what they have not got and something is better than nothing. Each time you get a payment, you are nearer to dry land and the exposure is reduced.


In conclusion, the advice is to be pro-


active and professional in chasing monies that are due for payment. Members need to be setting the pace rather than waiting for the debtor to pay only when they decide to. It is not going to be at all straightforward for the foreseeable future and the credit control


function needs to be as efficient as possible so as to meet the challenges that will be faced. It is hoped that ‘tricks of the trade’ set out in this article will prove helpful in managing a process that


will be essential to ensure survival.


BIFA would like to thank James Campbell of The European Freight Trades Association (EFTA) for preparing this article. James’ contact details are: admin@eftaweb.com.


May 2020 11


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