What to do when you’ve tried everything

Credit management is hard work – we can all agree on that! And sometimes, no matter how much effort we put in, how many calls we make, letters we compose and strongly worded emails we send out, eventually there comes a time when we have to face facts: the client just isn’t planning on paying anytime soon – if at all.

What to do when you've tried everything

It feels awful when this happens, and for plenty of good reasons. You’ve put a lot of time and effort into chasing up that money; you’ve done everything right, but there’s still that goading feeling of being let down by a client and cheated out of money. You might even feel like you’ve been defeated – and it’s definitely not going to be good for your team’s KPIs or the company’s cash flow.

But it’s also important not to dwell on the negatives. Instead, brush yourself off and make a decision about how to proceed next. Policy, process, and controls: are you managing them effectively?

The Chartered Institute of Credit Managers (CICM) has published a useful guide about what to do when all else fails. They point out that it’s a good idea to act quickly once you’ve come to the conclusion that a debt is going to remain unpaid. Remember: the longer a debt remains unpaid, the more likely it is to turn into a bad debt, which could cause even more damage to your business.

The CICM also suggests, before taking any legal action, or moving on to a debt collection agency, that you do these five things:

  1. Do one last check to ensure that the invoice details are accurate.
  2. Write to your customer and advise them that you will be exercising your statutory right to claim interest (at a rate of eight per cent over the Bank of England base rate), as well as compensation for debt recovery costs under Late Payment legislation. Also, let them know that you will be taking further action.
  3. Make sure any additional orders from the client are stopped – you don’t want the outstanding debt to grow.
  4. Think about the commercial reality. If a customer truly has no money, further action is unlikely to help, and the costs incurred could just increase your own losses – so consider them against the size of the debt.
  5. Choose a solicitor or agency carefully – check their backgrounds, ask for references and make sure they belong to the relevant trade association or professional body.

We also suggest taking some time to examine how the case was handled and to look for learning opportunities, or ways you could improve your processes. While the problem of non-payment is unlikely to be a reflection on how your credit management team operates, if there’s a chance to make things better – even if it’s a small adjustment – it could help in the future.

If you’re thinking about investing in credit management software to improve your O2C process and bring down DSO, or if you’d like to learn how OnGuard can help you boost your credit management function while building stronger client relationships, please read more about Why great work needs great tools.


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If you’d like to learn more about how OnGuard credit management software can help you save time at work, please don’t hesitate to get in touch. Please get in touch on +31 (0)294 25 6666 or contact@onguard.com. You can also keep up to date by following us on Twitter @OnGuardHQ.

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