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Iline Potgieter - Safeguard Your Business From The Potentially Incapacitating Effects Of Non-Paying Clients

One should always remember that proper planning and management are the keys in effectively dealing with
outstanding debts, which is one of the biggest challenges for small and medium enterprises in South Africa.

In the previous edition of Business Focus you will recall that we dealt with 'Avoiding Bad Book Debt' and 'What Should Be Done?'. But what if you can identify a potential non-paying client and diminish your risk?

We have decided to highlight a few points that one should pay attention to before one generously grants credit and/or randomly just renders services:
It is very important that the application form is entirely completed. Should you have to hand your client over for debt collection this is one of the most important documents that your debt collector will use to get in touch with your nonpaying client.
When rendering a service, make provision in your quotation that a certain percentage deposit is required before commencement of work, this will reduce your risk.
One of the most imperative things in an agreement is the proper authorisation thereof! Always ensure that you and your client have initialled each page and signed same together in front of witnesses. This agreement will be used to strengthen your case should legal action be instituted, once your debt collector has exhausted all the appropriate methods to collect the outstanding debt.
Include clear payment conditions in your agreement.
Should you render a service, ensure that once the work has been completed you get a name, surname and signature on either the job card and / or the invoice. Your job card / invoice must be accurately dated and must consist of a proper description of what was done.
Get as many contact details as possible i.e. telephone numbers of friends, relatives including spouse/ partner details, ID numbers, addresses, proper references, landlord, valid trade references etc. This information will be used to track down your non-paying client.
Check the references are accurate: confirm addresses, telephone numbers, ID numbers and spouse details if applicable.
Should you deal with a company, check the registration number of the company, conduct a company search to verify director details.
Frequently Asked Questions and Answers

Q: When should I consider the handover of a non-paying client?
A: Once your account and/or invoice is 90 days outstanding.

Q: What will it cost me to handover a non-paying client?
A: Normally the cost will be discussed between yourself and your debt collector. However, Dynamic Debt Solutions works on a 'no collection - no fee' basis.

Q: How do I deal with nonpaying clients, as I still want my business to grow?
A: Understand that late payments can create a huge crisis for your business - take prompt action to safeguard your business against late payments.

Follow up with your clients, contact them immediately if a payment is late, find out why payment was not effected or delayed to help avoid this in the future. Follow up on outstanding invoices on a regular basis.

Be front of mind - by making it clear to your clients that you expect to be paid on time and always get in touch with your client if payment was not effected, you're more likely to be front of mind when clients schedule payments. This means a customer juggling payment due to cash flow problems will be more likely to give you a higher priority than a business whose systems are more relaxed. Many people or businesses 'pay the ones that makes the most noise', within reason. Ensure that this is you.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Tel 086 155 2288

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