How to maintain a healthy working relationship with your debtor? Tips & Advice
With any business comes a degree of debt. But it is who you work with that is the most important factor in ensuring a long-term working relationship. This blog will discuss the main warning signs that businesses should look out for prior to choosing a business partner and during the working agreement. It will also discuss the multiple ways a healthy working relationship with your debtor can be maintained for the foreseeable future.
The Red Flags to Watch Out For Before Choosing A Business Partner! 🚩
1. Low Credit Score – Determining the financial state of a business is a vital indicator of its stability as a potential debtor. The scale (between 0 and 100) will take into consideration factors like the number of recent credit enquiries, payment behaviour, and the age of its credit history. Those who attain a higher rating will present a healthier financial state overall. For any company, this step should be heavily considered prior to choosing a business partner.
Did you know?
“60% of UK directors were once the director of a company that is no longer trading” (Creditsafe, 2024)
The Warning Signs To Look Out For During The Contractual Agreement
Tuning into your customer’s behaviours is a great way to clearly identify if there is a risk of your invoices being paid late. By doing so, this will allow you to take the necessary action to minimise the impact this could have on your business.
1. Communication Suddenly Stops 🚫
When your customer suddenly stops communicating with you, this can be a major indicator that they are trying to avoid paying. This is a common tactic used by debtors. But why? Well, often this can be a sign that the debtor themselves are dealing with their own financial struggles and are therefore unable to repay the creditor as a result. At this point, when you know for sure that your client is telling a lie, you must take action and press on to recover the outstanding amount.
2. Excuses, Excuses, Excuses
Excuse after excuse with no payment can be extremely frustrating. But for many, this is the harsh reality of day-to-day business.
Some of the most common excuses include:
- The invoice has already been sent
- The invoice has not been received
- The goods/service has not been received
All of the above is often a delay tactic to avoid addressing the main issue at hand, paying the debt itself! Try not to fall into this trap as more often than not, these excuses will only continue for as long as you accept it.
How To Maintain A Healthy Working Relationship With Your Debtor
Many businesses simply do not take into consideration the importance their own actions can have in influencing debtor behaviour. Some ways a business can help in ensuring a good working relationship with their debtor include:
1. Invoicing on time is essential ⏰
Invoicing on time is just as important as paying on time. This is because invoicing on time can determine the nature of your working relationship with your debtor. If you are regularly not invoicing debtors promptly, this can be seen as you being careless and having a lack of awareness about what you are actually owed. As a result, debtors may take this as a sign that they can metaphorically ‘pull the wool over your eyes’.
Tip: Make sure all invoices being sent to your debtor are precise and understandable. This will help prevent queries being made and thus payment being delayed in turn.
2. Debt Recovery Procedure 💰
No payment is every guaranteed. So this is why every business should have an established debt collection procedure in place as a result. Prior to contacting, ensure you have all the necessary evidence present. This includes key things such as the date to which the invoice should have been paid and the agreement made between both business and debtor.
At Darcey Quigley & Co, we understand the importance of an effective credit control process and strive to ensure the protection of your brand. That is why we are the UK’s leading debt collection agency and have helped thousands upon thousands of businesses recover the money they are rightfully owed.
If late payments have been affecting your business, why not book a call with one of our friendly debt recovery specialists or phone 01698 821 468 today!
Lynne is the Founder and CEO of Darcey Quigley & Co.
She is passionate and determined to help businesses get overdue invoices paid quickly.
Having worked within the credit management industry for over 27 years and ran UK leading commercial debt recovery specialists Darcey Quigley & Co for over 17 years, Lynne has helped businesses recover commercial debts from every continent across the globe.
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