Don't Let Your Debtors Drag You Down

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Date: 01/10/2010

To avoid problems with debtors, get your credit arrangements clear from the start and manage them properly

If you want to avoid running into problems with debtors, start at the beginning of the relationship. Do you have a good credit application form, which asks the right questions about prospective clients? Do you check out the entity you're dealing with - whether it's a business name, a company, a trust or a partnership? Do you take up references, and check them? Roger Mendelson, of Prushka Fast Debt Recovery, says it's also important, if you're dealing with a company, to get Directors' Guarantees. If you haven't done the right preparation, you'll find it harder to get your money, and so will debt recovery firms when you call them in. It makes the process slower and more costly. Recent changes to the Bakruptcy Act are also making it harder to enforce judgments for debts of between $2,000 and $5,000, which are the most common.Make sure you give someone the time and the authority tomanage your credit arrangements with customers. If the money doesn't come in, your cashflow, and hence the survival of your business, are at risk.