There are countless examples of matters involving debts where the supplier does not initially know who they have contracted with. There are a multitude of reasons for this, not least because customers do not know and do not seek to find out who their energy supplier is.
By getting this information right from the outset, the supplier gets paid for the energy provided, and the customer avoids a large bill out of the blue.
What Suppliers Can Do
In an increasingly competitive market, it is tempting for sales teams to sign up as many customers as possible with only limited financial data, avoiding any barriers which may deter new customers. Unfortunately, this short term thinking often causes significant repercussions down the line. While sales teams hit their targets, sometime later the revenue management team is trying to recover the money when the customer does not pay, and are unable to contact them because the number obtained is a dead line.
It is therefore crucial that you obtain the correct information about the new customer, which should include (but is not limited to):
- double checking the correct spelling of their/the company's name
- identifying whether you are talking to the director of a company which is liable as a corporate entity
- identifying whether your customer is an individual trading in some form and is therefore personally liable to pay the invoices
- identifying whether it is an individual trading as a company, Smith & Jones is insufficient. Detail Mr John Smith and Mrs Sara Jones trading as Smith & Jones
- recognising whether they are on a deemed or fixed term contract
- whether you need a security deposit
- clarifying whether it is a landlord's supply, and if so, make it clear from the outset that the landlord is responsible for paying the bills
- identifying whether it is a student let or similar/HMO which means that the occupier is likely to change regularly
Why You Should Do This
- It maximises the chances of you getting paid without any issues arising as there will be certainty over the identity of the debtor and the (valid) defences open to them should be very limited.
- You will be able to avoid extensive pre-action correspondence as, in the event you do have to take legal action to recover the money, you will be able to send the relevant pre action correspondence promptly.
Therefore, by being diligent when you are signing a customer up you can:
- reduce the likelihood of the customer forming part of your bad debt portfolio
- reduce the legal spend on those debts that you do need to pursue
How You Can Capture the Information
- Due diligence at the outset.
- Train and actively encourage your sales teams to capture the correct information. A script or guide may help them to check:
- the full name of the customer, and the spelling of any unusual names
- all contact numbers available
- email addresses, and question those which look like personal email addresses when you are signing up a company
- the full name of the company, and check Companies House whilst they are on the phone - this is a public record which is easily accessible and free - you can also follow the company on Companies House which will help you to see if the company is overdue with its' accounts which may be a trigger for a greater financial problem/insolvency
- Enable your sales and revenue teams to work together collaboratively in the way which suits your business, eg a representative from each team attends meetings about debt.
- Get your panel of solicitors/DCAs/sales/revenue management teams in a room to share the issues that they are experiencing, and develop and cascade policies/strategies to deal with those issues.
If you have any questions about this article, or would like some advice on your current debt portfolio, please contact Kellie Thatcher in our Debt Recovery team on 0117 314 5462.