Customer Owes You Money? Here’s How to Protect Your Business
When a customer owes you money, the best protection usually started before the debt existed.
When a customer owes you money, the best protection usually started before the debt existed.
Put terms in writing
Verbal agreements are harder to prove and easier to misunderstand.
Use
- Quotation
- Purchase order
- Contract where suitable
- Invoice
- Delivery confirmation
Keep a collection timeline
Do not wait three months and then suddenly panic.
Follow
- Reminder before due date
- Reminder on due date
- Formal follow up after due date
Know when to get help
Serious or disputed debts may need professional advice.
Consider
- Accountant
- Lawyer
- Debt recovery professional
- Internal credit control
Protect future sales
If a customer is already overdue, think carefully before giving even more credit.
Possible actions
- Pause new work
- Ask for deposit
- Reduce credit limit
- Require payment before delivery
My view
Being nice and being careful are not opposites. Good documentation protects both sides and makes it easier to solve payment disputes properly.
Need a second opinion?
If this is something you are dealing with in your business, you can always message me. If I have an idea that may help, I’ll tell you what I think.
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Written by
Lucian Yong
Business owner and freelance web designer in Puchong. I write simple, practical things for Malaysian business owners.
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