December 14, 2010 - Anonymous
Small businesses need to ensure they credit check customers in the run up to Christmas or risk selling to individuals and firms which later prove unable to pay, a debt recovery firm has warned.
Daniels Silverman managing director, Carole Hughes, said that as the Christmas season goes into full swing, and shoppers rush to beat the January VAT increase, many small firms are neglecting credit checking procedures.
"Small firms will pay the price later as customers default on payments for goods received in December," said Hughes. "A sale is not a sale until paid in full. However, we see many small firms that, buoyed by the prospect of a sale, have failed to follow the fundamental credit checks to ensure they are dealing with a reputable company or individual, capable of fulfilling the payment terms agreed at a sale."
She added that there were an increasing number of cases where customers have misled businesses about their ability to pay. "Ultimately, failing to carry out basic credit checks can be expensive," she said.
Hughes said firms should credit check new customers by:
According to research from Bacs in June this year, 45 per cent of small firms have experienced late payments, and the average amount owed is £32,000.