How to Effectively deal with Defaulting Customers and Improve your Cash Flow

Following the UK general election and the Conservative party’s success, there is slightly more clarity on Brexit in that we now know it will definitely happen. It would be unrealistic to think that recovering outstanding debt in Europe will become easier post-Brexit and all companies intending to conduct cross-border business with Spain and Italy should ensure that they have in place procedures and practices to have the best chance of recovering any outstanding invoices.

New customers should be credit checked and the viability of the business should be established. Perhaps the most important step is ensuring that your terms of business are rock solid and completely transparent and there are no loopholes or ambiguities that make it harder for you to collect your outstanding debt should the need arise. No business can predict when one of their customers is likely to experience financial problems and it is always expedient to closely monitor all customers, even those with whom you have a longstanding relationship, to make sure that your exposure to risk is kept to a minimum. 

These steps may seem like obvious business practice but frequently the desire to obtain a new customer may mean that making sure that a business new to you is actually sound, is overlooked. Giambrone’s European debt collection team can assist you with pre-trading checks so that you can get off to a good start with a new customer.

Also, there is often a failure to recognise that established customers are extending their credit beyond your terms of business and are relying on previous good will to do so.

There is a reasonably straightforward method of establishing and pursuing an outstanding uncontested debt through a European Payment Order which was specifically designed for cross-border debt recovery to work in conjunction with local debt recovery systems. Giambrone has the undeniable advantage of lawyers who are not only experts in debt recovery litigation but are skilled in negotiating pre-court settlements with defaulting debtors thus avoiding the legal costs of court action.

 However, if you need to take the litigation route to recover your outstanding invoices, Giambrone’s European debt collection team has an outstanding recovery rate and can assist with all aspects of recovery from establishing the defaulting company’s trading address to pre-action telephone recovery, letters before action, issuing of proceedings in various jurisdictions and eventual enforcement. In extreme cases it may become necessary to initiate the winding up of your debtor’s business and recovering your outstanding debt from the liquidated assets.

In a recent report companies doing business in Europe reported that bad debt losses are increasing due to their customers’ financial difficulties. Late payment is one of the biggest risks that companies doing cross-border business face; without a fluid cash flow, a business will not, in turn, be able to pay their own debts. Taking swift action when problems are recognised will not only limit your risk but send a message that you will not allow a spiralling unauthorised credit to damage your business.

If you would like to know how Giambrone can assist you collect your outstanding invoices please click here.