Who are your customers anyway?

Year Published: 2013

Does it matter? Maybe not, but if you’re not paid for your goods or services, then it probably will.

Consider this scenario: a new customer comes in and wants to do business with you. Great! You ask him or her some brief details – a name, delivery address, what they want from you. It’s a substantial first order for your business, just what you need right now, as cash flow’s a little tight and a big cash injection will, for a time, ease the pressure. You arrange for the order to be delivered and the delivery note is signed. The customer takes your goods. You forward an invoice with your usual payment terms, 14 days.

So 14 days come and go and no contact and no money. You try calling to chase for payment. No one answers. You try again the following day and are told that he/she no longer works for the business and the office person you’re speaking with knows nothing about the order. They can’t authorise payment and can’t pass you to their boss.

This sort of story continues for a couple of weeks and it all starts to ring alarm bells with you. You’ve got bills you need to discharge yourself and staff whose wages you need to pay. Cashflow is even tighter than before and you unfortunately end up needing to arrange an extension of finance with your bank.

When faced with such circumstances, the only way you will recover the money is if you get the right legal entity at the beginning. You need to know who it is you are contracting with. If a little bit longer had been spent with your elusive customer at the beginning, it is likely you would have got the information you needed to know and made sure that you were actually contracting with a genuine company.

There may well be things we, as lawyers can still do to help recover those monies, but there will be delays and potential uncertainty so, we do advise to get full and correct information at the very beginning from all of your customers. Make sure that your invoices are addressed to the individual or company that you are actually selling the goods to, so that, should it be necessary to take legal action to recover your money, it should be a smoother, simpler, less eventful and hopefully, a less costly exercise.

For further information on debt recovery issues, please contact our dispute resolution team on 0161 475 7676.

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