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What is the best way of chasing overdue payments before they cause serious cash flow problems?

The first step might be to escalate the issue. Instead of having your credit controller or bookkeeper talk to their purchasing department, try making a phone call yourself and asking to speak to the customer’s managing director. Make it clear, firmly but politely, that you need to paid, now.

You should also consider putting the customer on ‘pro forma’ or credit stop. Until the customer pays off their outstanding balance, you will not make any further credit sales to them.

If these measures still do not produce payment, you should consider asking your solicitor to send a solicitor’s letter. In effect, this is the first stage of taking legal action. The costs are low, and the letter is often enough to convince the customer to pay.

Failing that you may want to consider further legal action. Factors to consider include the value of the debt, the costs of pursuing it and how likely you are to recover what you are owed. You should take legal advice.

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