Credit where credit is due, Invoices are credit too.

For a long number of years now I have worked in the Credit Management and Debt Recovery arena and yet only in recent conversations have some business owners admitted that they have never really thought of unpaid invoices in connection with credit, instead, they think of credit in terms of loans and credit cards, catalogues, cars on finance etc.

Perhaps this is one of the reasons why a very high number of small to medium enterprise businesses fail before year five, lack of cash being one of the key reasons. By cash, we don't mean investment although that can certainly be a problem we mean overdue invoices, late payment and bad debts.

Sub Contractors and Tradesmen your labour is your asset, your invoice is your wage, you are a business yet far too many times you fail to see yourselves as a business. Gone are the days when you can agree on a date, time and amount on a text message, you need to cover yourself against disputes and queries and think how will I prove what I am owed, why I am owed it and that I did what was required to standard?

Of course, it could be that small businesses feel they cannot afford to engage a debt recovery firm or pay a Solicitor and hat you have to be a big Company to need a Credit Policy and Process: of course, those that have learnt the hard way or work within the industry will shout out wrong, wrong on all counts, with a resounding "You cannot afford not to"

Another reason may be that they are lulled into a false sense of security on the basis that the Government brought in the Prompt Payment Directory, which is, of course, voluntary for large Companies - point to note B2B business between SMEs won't be touched by this so don't be fooled that everyone will pay on time every time.

MCOL - Money Claims on line aka the small claims court does not mean that a debt will be paid it simply is a path to secure a CCJ which is a statement the money is owed which will adversely affect any credit the debtor business or consumer applies for. It is not a collection tool, disputed matters remain disputed the dispute does not vanish once a claim form is issued. Debts below ￡10000 will not recover Solicitors costs, disputed debts can easily incur costs which exceed the value of the amount being argued. If you drop the case midway then you could end up paying the other sides costs as well as yours, reject an offer that may be perceived reasonable and again you may end up with the same offer, plus your costs and theirs.

Whilst it is totally understandable that in times such as these a business owner may focus on the SEO for the business, the website and lead conversions, throw themselves into networking all of that hard work can be lost with sometimes one bad debt or a series of late payments.

Xero, Quikbooks and Sage etc are all great but they do not take the place of Credit Management and Policies, they are only as good as the information you put in, get that wrong, use badly or incorrectly worded reminders, wrongly timed reminders etc.

We know this because time and time again we are referred cases with incorrect invoices, no supporting evidence, no terms and conditions to cover disputes, CCJs that the business owner does not know how to enforce, debts that have been outstanding months or even years.

So let there be no mistake your invoices are credit, our economy revolves on credit, credit does not mean personal credit and loans. your invoices are lines of credit and they represent a risk to your business.

A reputable debt recovery and credit management firm can help you get your credit policy and process in place, show you how to use it and be there when you need them when you do face problems being paid.

Don't be a victim of "Until Debt do us Part"

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