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Ten common mistakes when tackling business debtors – Mistake 1: Failing to have a credit policy

11 January 2016

Sarah Everton, dispute resolution lawyer at Myers & Co Solicitors in Burslem, Stoke-on-Trent highlights the ten most common mistakes business owners make when it comes to tackling debtors, and advises on the best course of action.

Mistake 1: Failing to have a credit policy

When a company provides goods or services before receiving payment, it is essentially the same as handing over cash. For this reason it is vital for cash flow and ultimately the survival of your businesses to be able to predict when you are likely to get paid and the cost of ensuring that this happens. This begins with having a credit policy.

By gathering the same types of information from each customer, it is possible to attribute different risk levels to each and adjust your payment terms accordingly. Your credit policy provides uniformity of terms for each type of customer you have and ensures compliance with regulations. Without a credit policy you are at risk not only of losing money, but also of breaching consumer protection regulations. If you treat some consumers more favourably than others without proper rationale, you could even fall foul of discrimination legislation.

For more information on credit policies or any other debt recovery matter, contact Sarah Everton on 01782 525 012 or email sarah.everton@myerssolicitors.co.uk.

The contents of this article are for the purposes of general awareness only. They do not purport to constitute legal or professional advice. The law may have changed since this article was published. Readers should not act on the basis of the information included and should take appropriate professional advice upon their own particular circumstances.

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Sarah Everton

DDI: 01782 525 012
E: sarah.everton@myerssolicitors.co.uk



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