HOW TO LIMIT NON-PAYMENT RISKS?

Bad payersandunpaid debtscan be a real problem for your business. Unfortunately, almost all commercial institutions have to deal with this issue, but surprisingly few introduce measures to preventnon-payment risks. TCM reveals a few basic rules you should consider following automatically.

Know your debtor

Major companies operate withcredit 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 outstandinginvoicesfirst. These limits are set according to the client’s apparentsolvency(i.e., for a company, its financial health as indicated by its last threebalance sheetsavailable free of charge on theBCEwebsite) 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 vitalto clearly and correctly identify yourdebtorincluding 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 usefulcontractual clausesthat allowcreditors to anticipate the non-payment of areceivableby one of theirdebtors. While they won’t directly preventnon-paymentsfrom occurring, they are still an effective way of preparing for a possiblepayment default. As well, it’s particularly important for yourcontractto specify thepayment period, as payment will be considered to be latefrom the afterthe date indicated.

Invoice promptly

To sum up,legislationstipulates that you should invoice no later than the 15^thday 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 yourdebtorreceives it straight away.

React swiftly in the event of non-payment

If, despite the various steps taken to limit therisk of unpaid debts, yourdebtorexceeds the paymentperiod, 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 specialistrecovery companythat will chase yourdebtorimmediately by phone,payment reminder lettersand visits to their address. Many methods can be used, but the key factor is acting quickly. For more information, see ourcredit management guide.

HOW TO LIMIT NON-PAYMENT RISKS?

Bad payersandunpaid debtscan be a real problem for your business. Unfortunately, almost all commercial institutions have to deal with this issue, but surprisingly few introduce measures to preventnon-payment risks. TCM reveals a few basic rules you should consider following automatically.

Know your debtor

Major companies operate withcredit 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 outstandinginvoicesfirst. These limits are set according to the client’s apparentsolvency(i.e., for a company, its financial health as indicated by its last threebalance sheetsavailable free of charge on theBCEwebsite) 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 vitalto clearly and correctly identify yourdebtorincluding 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 usefulcontractual clausesthat allowcreditors to anticipate the non-payment of areceivableby one of theirdebtors. While they won’t directly preventnon-paymentsfrom occurring, they are still an effective way of preparing for a possiblepayment default. As well, it’s particularly important for yourcontractto specify thepayment period, as payment will be considered to be latefrom the afterthe date indicated.

Invoice promptly

To sum up,legislationstipulates that you should invoice no later than the 15^thday 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 yourdebtorreceives it straight away.

React swiftly in the event of non-payment

If, despite the various steps taken to limit therisk of unpaid debts, yourdebtorexceeds the paymentperiod, 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 specialistrecovery companythat will chase yourdebtorimmediately by phone,payment reminder lettersand visits to their address. Many methods can be used, but the key factor is acting quickly. For more information, see ourcredit management guide.