Google Adwords 0808 278 1398 Bing Ads 0808 274 4482

How can I protect myself against cash flow problems when selling to high risk customers?

Before you agree to sell to any customer on credit, you should check their creditworthiness. Online credit ratings are inexpensive. You can also check trade references, ideally following up with a phone call in case the supplier was unwilling to put any concerns in writing.

If you have any doubts about their creditworthiness, you should ask yourself whether you want to offer them credit at all. You may be able to negotiate cash in advance, or might be better off not having them as a customer. In any case, you should only allow customers a sensible credit limit, reflecting how risky you think they are and how much your business could afford to have tied up in overdue payments or bad debts.

Make sure you have a good credit control system that encourages prompt payment. This should include everything from having the right terms and conditions to chasing up payments. Watch out for any warning signs such as increasing payment delays.

You may also want to consider using a factoring company. In return for a fee, the factor advances you most of the value of outstanding invoices, chases payment on your behalf and takes on the risk of bad debts.

Related FAQs

Expert legal advice you can rely on,
get in touch today

Please let us know you are not a robot

Your local legal experts

Why QualitySolicitors?

With QualitySolicitors your first initial assessment is free, so you can call us without worrying about being charged for a call you might not have actually needed to make. And because we place our clients are at the heart of everything we do, we make these five customer service promises to make sure you'll feel properly looked after.

This is why, in the first instance, most people looking for legal help in relation to a 'Home And Property' call QualitySolicitors for a Free Initial Assessment over the phone before requesting our Ask the Legal Expert service; which is an introductory 45-minute face-to-face consultation for £99.