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How to claim your bad debt

Has a small business it is good to claims your bad debt from the customers who did not pay their bills, why we say this at Girlfridayz it is because if you do not claim your money due it takes away a chunk of your profit.

You do the work your client requested to the best of your ability and most of your clients are happy with the price and the work that you did and most people pay you as they are appreciative of your support has you providing them with the solutions to their needs.

However, some people do not appreciate your efforts and decide not to pay you for some reason or just because they mean and out to defraud your business. These people if you let them get away with not paying you for service render or goods sold your business slowly will suffer due to lack of incoming funds because you are not chasing your bad debt.

Whatever the reason or the excuse given they are responsible and liable for paying the sum requested by yourself and not claiming your bad debt is a signal to your customers that it’s ok to defraud you and use you for free without your permission.

How to entice your customers to pay you what owed and avoid Court Proceeding

First, you need to discuss with your customer's payment option, then give them a chance to pay and discuss their payment methods as you are not in your customer's purse, therefore it is wise to listen to your customers and ensure that they stick to the repayment plan agreed if you offer a repayment plan. You can also ask for a deposit or advanced payment to ensure commitment, especially with new customers or offer the option of paying by Direct Debit on their preferred date to ensure that you get paid the amount requested.

In order to keep your customers for the long term and ensure they become your loyal customers and talked about you in a favorable manner to their peers, you can offer holiday payment break when the repayment facility is a long term agreement they will appreciate the payment break and restart on the date you tell them until the last payment is made.

If your customer failed to pay you the agreed amount on your repayment plan meaning breaching their repayment facility you can offer a net 30 days strictly to recover the balance owed and give time to your customers to sort out their payment owed to you. If your customers honest they will pay you in 30 days.

However, most people settle their payment in 30 days, as it is convenient to most customers and often the payment is made by direct debit, or on occasion, you can offer 60 days payment offer if you really know your customers and it is a long term customer depending on the relationship and level of trustworthiness a 90 days can be offered but you must request a guaranteed and warned of court proceedings if payment required is not paid on the due date.

Most people will pay you, however, the dishonest people become the persistent non-payers you will need to initiate court proceedings to recover the debt and tell them that not paying their debt will affect their credit rating and loan application including mortgage or future credit application.

The latter warning usually prompts most people to pay you what they owed as they want to avoid court proceedings.

How to claims your bad debt

If your customers do not pay you below are the step to take to recover your money due prior to take them to the small court to try to recover your fund.

  1. Send the first reminder letter informing your customers that their account is in arrears with you and the amount owed since which date including that they should contact you to discuss the arrears and a deadline to make the payment and tell them that you have added late payment fee.

  2. If they failed to respond send the second reminder letter with the latter information include a warning of intent of court proceeding if they do not pay by your second deadline and still offer the opportunity to contact you to discuss their account with you.

  3. If this second attempt failed and no response send the third reminder letter but this time telling them that you will start court proceeding if the debt is not settled by your deadline.

If all the steps above failed you can begin to make an application to the county court because before you contact the county court you need to evidence that you try to recover your fund owed to you.

In conclusion

As a business, you need to recover your bad debt as I stressed it before if you do not it cut away any profit your business can potentially make and you also send a strong message that your business does not tolerate dishonesty and intend to get paid for all the work carried out in good faith and providing a service or a product to your customers.

Girlfridayz can help you claims your bad debt with the initial process meaning writing your letters prior to you going to the county court if no positive result is seen at this stage we only charge £30 per letter and usually, 70% of people pay what they owed at this stage.

Only the persistent non-payer needs to be taken to court and for this, you can make an online application and pay the fee required depending on the amount of the debt owed to start the court proceeding process to recover your fund.

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