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Making the debt collection process easier

By Adrian Huston

Whether your business sales figures are down or not, the success of your business depends on bringing in the money — cash flow.

Many people are finding their customers are slower in paying them these days. So it is vital that you keep on top of money owed to you.

Today I will cover some points, some of which may seem common sense, to help you keep the money coming in.

Make paying you easy. When our business developed a substantial field of expertise with workers abroad getting fees paid was a worry. How does someone thousands of miles away pay you? Do they have a UK cheque book? Will bank transfers cost both of you a fortune? Our solution was to introduce a credit card machine. For about £15 per month rental it allows people to pay us while overseas. It also allows local people to put our bill on their credit card if things are short this month.

Credit card fees charged to the business are not too high. If you belong to a trade association you may be able to get them below 2% for credit card transactions. It is permissible to pass this on to your client — though many businesses absorb the cost. Debit cards have a flat fee around 20p.

Make your credit terms clear. If you want paid in 20 days state it in any contracts. State it on your invoices. Mention it on statements or letters chasing debts.

Chase up debts sooner. Once the payment date has passed make sure the customer knows.

Charge interest. Check out the website Often I find the mere threat of imposing an interest charge brings in the money. If not then once you charge interest and the flat rate debt collection charge then you may get your money.

The details of the flat rate debt collection charges are at http://

For debts under £1,000 you can charge £40. So this means that once a debt is overdue you can charge £40 plus the interest. The £40 is the bit that will make customers sit up and take notice.

I always recommend writing to the business which owes the money setting out what you are entitled to add to the bill. Give a deadline after which you will impose the charges and stick to it.

Once you have imposed charges and still not got anywhere then small claims court is your next route. Be warned — success at small claims court does not guarantee getting your money. However the threat of it is often enough if your customer is worried about messing up their credit rating.

To use the Northern Ireland Small Claims Courts check out and scroll down to Small Claims. Here you can, if you wish, make the claim online rather than on paper forms. Read the Small Claims guide. Fees range from £30 to £100 with a maximum claim of £2,000. If you are owed £2,342 you can take a claim for £2,000 is you are prepared to give up on the £342. If you win your case the person owes you the fee as well.

When considering taking a case warn the person who owes you money that once you start the process they will also owe you the court fee.

Collecting debts does not mean being unpleasant to people. The main skills required are persistence and dependability. Keep on racking up the pressure — set a timetable and stick to it. Do what you say you will.

Finally I would say learn from the experience. For example perhaps after getting to a certain stage you will decide to sell no more goods to that client.

Keep the money coming in and the impact on your business of any downturn will be minimised.

Adrian Huston, a former tax inspector, is a director of Belfast tax and accountancy firm Huston & Co — or 028 9080 6080

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