It has now been more than a year since the world economy started to face the downward slope due to covid pandemic. UK is not an exception to this current scenario and the Government has come out to aid businesses of all class and forms. In these difficult times, extension for debt repayment has been one of the most common form of reliefs that people are availing.
As a small business practice, it is always advised to chalk out a plan that will help you manage your finances better. The management includes tracking your inflow and outflow of funds, maintain accounting records, tax planning and maintaining provisions for debt recovery. Since, all transaction are not made in cash, there may be instances where goods/services are sold on credit.
While trying to recover debt, there are two scenarios –
- Credit has already been released
- Credit has to be released
Recovery where credit has already been released
As per data published by Sidetrade (B2B Artificial Intelligence platform), rate of increase in unpaid invoices have shot up to 23% since the beginning of lockdown in 2020. The leverage has been offered by the Government to SMEs who are currently facing difficulties in running their enterprises. When it comes to recovering debts from these businesses, the chances are very thin currently as every entity is facing crunch from the financial aspect due to lack of demand in the market (pharma being the exception), but that shouldn’t stop you from making a follow-up for payment. If the deadline has already crossed, a friendly mail enquiring about their current situation and along with a gentle reminder about due payment should be good enough to give them a reminder. In case they receive the mail and fail to reply within 7 days, consider hiring a debt recovery agent who would assist you in this regard.
Recovery where credit is yet to be released
If the credit has not been released yet, then make sure the following is taken into account:
- Background check of the person availing the credit. If the credit history is poor, then refrain from offering credit as it may trouble your business later on.
- Have the payment dates clearly mentioned on the invoice, along with necessary terms and conditions of the payment.
- Within terms and conditions, do mention applicability of late fee, if payment is not made within 7 days from the deadline. This acts as a helping agent towards receiving payments on time.
- Do state that failure to pay on time or ignoring mails for recovery may attract legal consequences.
When you have the terms and conditions of repayment specified in detail before allotting credit, it becomes easier for you safeguard your return. Cases where non-repayment is concerned can quickly be escalated to a debt collector, who on your behalf will take care of recovery.
Accountant for small businesses serves as a professional resource who can help you in adverse time. Right from maintaining books of accounts to tax compliance, a comprehensive gambit of services is interlinked with each other to establish a concrete foundation for your business’ accounting. Added to it, debt failures no longer remain your headache, rather your accountant works on the regulatory norms to help you get your money back without stepping into the fuss.
We have been a trusted accountant for small businesses in UK for the past 10 years, feel free to reach out to us in case you have queries.