Beat The Corona Crash!

Credit Control and Debt Collection

Yet another great article that was written by Bex Inglis from Princess PA ( who helps me in my own business WB Gas Ltd )

With all the recent worry about COVID19, our financial stability may be starting to look a little bleak. Many businesses are now looking towards their unpaid invoices as a source to keep afloat. 

I’ve recently seen a few posts regarding the dreaded unpaid invoice. Most businesses seem to have this in check, but for those that don’t, the minefield of credit control can often cause a lot of frustration and anxiety. 

The most frequent question is “What can I do?”. Cue many comments (some jokingly) suggesting going back and undoing the work, bombard them with letters, phone calls and the like. But who really has the energy and spoons to waste on all that negativity?

We’ve heard all the sob stories of why customers haven’t paid:

  • I get paid next week
  • I am not the one paying
  • I forgot about it
  • (and my personal favorite) My dog died… (customer didn’t even have a dog when we attended…)

Let’s face it. We don’t like asking people for money, however, credit control and invoice chasing, in reality, is a walk in the park. With this simple guide by your side, you can gain a new financial attitude, that lets you focus on what you do great! 

Set up a regular time for a financial health check

The quick check can be done at the end of the working week and can take as little as an hour to sort out. Compile a quick report for the week: Jobs completed Vs Jobs Paid for. In the ideal world, both numbers should be the same. If you have any outstanding invoices, set aside some time to be able to chase them.

Establish a booking protocol to help credit control

Credit control starts the moment you accept a booking from a customer. By taking contact details from the start, you will be able to chase more effectively in the event of a non-payer. 

The following details should be taken and recorded at booking:

  • Full Name: “Mr. Smith” isn’t going to be enough, whereas “Mr. Joe Bloggs” is easier to chase
  • Full Billing address of the Customer: This is particularly useful for jobs that are carried out at a tenanted address. In my experience, most of the unpaid invoices I’ve seen have turned out to be tenanted properties, and I’ve not been able to chase for the debt. 
  • Email address: Save on paper and trees and communicate by email. This is particularly useful if customers then renege on payment. You have time-stamped evidence.
  • Telephone numbers: Texts are great for initial communication for the booking, but ideally should be avoided when it comes overdue payments. 

Take a deposit on larger jobs

By taking a deposit, you can give yourself some peace of mind that you have some cost back for a project. The deposit can be the cost of materials or a percentage of the final bill.  Customers that have paid a deposit are more likely to pay the final bill than those that haven’t. 

Create a payment timeline

Invoice the correct customer immediately after the job has taken place. 

The majority of trade businesses are now taking payment upon completion either by card machine or cash. 

If accepting payments by BACS you should allow 2 or 3 days for customers to get online and pay that to you. Always ask for a reference number on payments, usually the invoice or job number so you can allocate the payment to the correct invoice.

If paying by cheque… well… stare at the customer without blinking until they hand over a card or cash. In all seriousness get these banked the same day/next day. Post Offices now have access to all the major bank accounts including Starling Bank. 

Stay on top of Reconciliation

Don’t leave reconciling those transactions in Xero or QuickBooks (other packages are available) until the last minute. Keeping on top of them on a regular basis, ideally once a week can help keep your unpaid invoices down. You will spend less time searching for payments from customers and it’s less of a headache for your accountant.

Establish a credit control process and stick to it

Too often, I see rants from the sole trader, angry at the number of messages back and forth with non-paying customers. Think about that in terms of Time = Money, and you’ve basically spent nearly an hour over a month pleading/begging/threatening them to pay their invoice. After all that, did you even get paid?

An effective Credit Control process can not only ensure your cashflow is healthy in the long term but will also take the strain off your already crowded mental health. It takes the emotion out of the process, meaning that customers are more than likely to listen to reason and you can get on and earn your dollar. 

The process can be as simple as routine phone calls once a week until the debt is paid, or a more robust system with letters that ask for a response before passing the debt to someone more specialized. 

Bex’s Credit Control Masterplan *Evil Laugh*

  1. Call the customer – Paying bills for some customers is not a priority. In the world of home finance management, paying contractors is not a priority debt. In most cases, the customer may have simply forgotten that the bill exists. The ability to take card payment over the phone can be of great help here. Double-check with your PDQ provider if this is something you can do.
  2. Invoice Due Letter – This first letter is usually a bright and friendly email reminding them that they have an invoice due. For all written communication, give a date by which they need to pay, usually 7 working days, and the ways in which they pay. 
  3. First invoice Chase – This letter is to the point. Their invoice is overdue and requires their attention.
  4. Second Invoice Chase – Reminds them they haven’t paid or responded to the First chase letter. Here you can add that failure response or pay may lead to further action.
  5. Third Invoice Chases (Final Demand) – The mean letter. Use this letter to firmly tell the customer that they have one final chance to pay the amount outstanding or you will hand the debt over to be collected. Name the debt collection company you use within the letter. Send this one recorded/signed for delivery. 

Once the steps have been carried out, follow through with your threat and let the professionals deal with it. The point at which you do this can be 30, 60 or 90 days after the debt is due. 

Why use outsourced help?

I’ve mentioned before, that the average hourly rate for a plumber in the UK is £50-60, higher in the home counties and London. Every hour spent chasing customers for their outstanding payments is time you cannot earn. This is especially damaging to your business if the debt you are chasing is substantial. Outsourcing this work allows you to continue earning money while being safe in the knowledge your cashflow is being looked after. 

By outsourcing either your credit control or debt collection, you can also remove the fear of damaging a customer relationship you’ve worked hard to build. Due to the outside connection to your business, Virtual Assistants can remain impartial when dealing with clients, particularly the ones that owe any debt.  


Keeping on top of your Credit and Debt Control is vital to remaining profitable. 

Setting up a process also helps to keep your business mental health in check. Becoming too invested in our clients’ needs over our own can actually reduce the profitability of your business. 

If you need some help in your business admin then get in touch with Bex – bex@princesspa.co.uk

Looking for a new boiler in Milton Keynes? check out Your New Boiler – www.yournewboiler.com

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