A new customer can equal more profits to your firm, but it could also spell disaster if the customer turns out not to be what it seems. It may sound obvious, but it’s vital to be sure of the customer’s identity to help avoid the heartache of receiving a ‘gone-away’ advice in response to your invoice.
Start by getting complete and correct contact details for every customer via a proper Account Opening Form. This must include the correct address and telephone details which should be checked against alternative sources, such as the Yellow Pages.
In the case of a limited company, request the full Limited name and registration number; and for a proprietorship/partnership, ensure that you take private address details and telephone numbers. The Better Payment Practice Group has a sample account opening form on its website http://www.payontime.co.uk/collect/credit_app_pre.html
Using a Credit Reference Agency to check the credit viability of new and existing customers will often reveal any address anomalies which can then be confirmed directly with your customer.
Once you have established the new relationship, maintaining regular contact means you quickly become aware if a debtor relocates. Do not just issue invoices and wait for payment. Contact them by phone to enquire politely whether your invoices have been received, and in doing so, you can verify that the address and telephone details you have remain accurate.
Ask delivery staff to alert you to anything suspicious about the way goods or services are delivered e.g. if the customer insists on collecting the goods, without adequate verification of their trading addresses.
Tracing a debtor
If a letter is returned via Royal Mail marked ‘Addressee Not Known’ or ‘No longer at this Address’, never assume this is actually the case. Many practised debtors simply return a letter as ‘Gone Away’ to give themselves more time.
Start by taking the following steps:
If the debtor appears to be no longer trading from the premises you have details for, then consider the following:
You can contact these individuals at their home address or address lodged with Companies House but you cannot make them individually liable for any debt. A polite question should help you establish whether, for example, the company has entered liquidation, or a Creditors Voluntary Arrangement.
If this is the case, you may need to seek professional advice about your rights as an unsecured creditor to a limited company.
If these efforts fail then you could seek the help of a professional collection/tracing company who may quote costs usually from £50 to £60. For further information on debt collection and tracing agents, visit the Credit Services Association at www.csa-uk.com