Be decisive when bad debt escalates

By Ian McCulloch, Opus

14 Dec 2023

Ian McCulloch Opus

Debt write offs are inevitable; credit management departments that say otherwise are hopelessly optimistic, especially in these incredibly uncertain economic times.

The trick is spotting the problem early and keeping the loss to an absolute minimum.

Signs of payment problems come in many forms, including delayed settlement of invoices, spurious disputes, requests for longer credit terms or round sum payments against the outstanding balance.

The first warning could be an unexpected rise in order levels. Perhaps other suppliers have put them on stop? Industry gossip is also always worth listening to.

If you use credit insurers, the biggest red flag of all is when they reduce cover on a customer or pull it altogether. They know your customer’s finances far better than you do.

The moment there’s any doubt, decisions must be made immediately. Do you cut the customer’s credit limit, change to cash up front or stop supplying altogether? The decision needs to be informed, based on all the information you have, the scale of the risk for your business and an adult conversation with the customer about their problems.

You must be decisive, no matter how good the customer relationship. What begins as a £500 dispute can so easily escalate into a £20,000 bad debt. Just remember, if your profit margin is 10 per cent, that write off means you need to do an extra £200,000 in sales elsewhere to repair the damage.

If your bad debt problems are escalating, it’s time to check your own business’s viability, or better still call in expert outside help to advise you on the way forward.

Enjoyed this? Read more from Ian McCulloch, Opus

Latest news

1

Financial Affairs support the Red Rose Award winners' reception Networking photograph

Financial Affairs support the Red Rose Award winners' reception

24 Apr 2025

2

Lancaster University unveils cutting-edge computing and cyber security facilities Head of Lancaster University's School of Computing and Communications Professor Nigel Davies, Chris Ensor, Vice-Chancellor Professor Andy Schofield and Pro-Vice-Chancellor (Engagement) Professor Sarah Kemp

Lancaster University unveils cutting-edge computing and cyber security facilities

24 Apr 2025

3

Northcote announces new owners Alf and Clare Ellis as Lisa Goodwin-Allen returns as chef patron-director Craig Bancroft and Lisa Goodwin-Allen

Northcote announces new owners Alf and Clare Ellis as Lisa Goodwin-Allen returns as chef patron-director

24 Apr 2025

4

Major shareholder makes Inspired takeover bid inspired-500x500.png

Major shareholder makes Inspired takeover bid

23 Apr 2025

5

Nominate your favourite family-run business in Lancashire. Thompsons meeting (1).png.png

Nominate your favourite family-run business in Lancashire.

22 Apr 2025

Pc Prestonmacan Gif980x120 March
Background image for hub sign up block

LBV Hub

Leverage Lancashire Business View platforms

Post your news
Post your events
Post your offers
Build your network
Improve your SEO
Gain coverage in the magazine
Sign-up
Events
LBV122 May/June Launch Event
121 Lancashire Business View Magazine Launch
Networking
21 May 2025

LBV122 May/June Launch Event

Lancaster and Morecambe College, Lancaster, LA1 2TY

08:30 - 10:30

Sub36 Networking
Networking
11 Jun 2025

Sub36 Networking

British Jewellery School, Scorton, PR3 1BA

15:00 - 17:00

Lancashire Net Zero Carbon Conference
Net Zero Carbon Social 1200px 2
Networking
18 Jun 2025

Lancashire Net Zero Carbon Conference

Crow Wood Hotel & Spa Resort, Burnley, BB12 0RT

08:30 - 13:00

Lancashire Built Environment Conference 2025
BEC 315 X 315 Px
Networking
25 Sep 2025

Lancashire Built Environment Conference 2025

Blackpool Football Club, Blackpool, FY1 6HX

08:30 - 13:00

CMI Level 5 Management and Leadership Course
UCLanAerialCampus.jpg.jpg
LBV Hub Seminars
21 Feb 2025 - 21 Feb 2026

CMI Level 5 Management and Leadership Course

Preston Campus, Preston , PR1 2HE

09:00 - 17:00

CMI Level 5 Project Management Course
UCLanAerialCampus.jpg.jpg
LBV Hub Seminars
21 Feb 2025 - 21 Feb 2026

CMI Level 5 Project Management Course

Preston Campus, Preston, PR1 2HE

08:00 - 17:00

RISE - The Academy for Female Leaders and Managers
WENDY BOWERS RISE Illustrstion copy.jpg.jpg
LBV Hub Seminars
02 Apr 2025 - 08 Oct 2025

RISE - The Academy for Female Leaders and Managers

East Lancashire Chamber of Commerce, Clayton le Moors, BB5 5JR

09:00 - 15:30

People Power: Exclusive Event Series
Stay ahead in 2025.jpg.jpg
LBV Hub Seminars
29 Apr 2025 - 29 Apr 2025

People Power: Exclusive Event Series

People's History Museum, Manchester, M3 3ER

17:00 - 21:00

Planning for the future + navigating Inheritance Tax changes
Planning for the future + navigating Inheritance Tax changes for website.png.png
LBV Hub Seminars
01 May 2025 - 01 May 2025

Planning for the future + navigating Inheritance Tax changes

Stanley House Hotel, Mellor, Blackburn, BB2 7NP, Blackburn, BB2 7NP

08:00 - 10:30

Advantage: AI – A Workshop for Business Leaders – May 2
EV-land-2025-05B.png.png
LBV Hub Seminars
02 May 2025 - 02 May 2025

Advantage: AI – A Workshop for Business Leaders – May 2

Door4 Office, Burnley Wharf, Manchester Road, Burnley, BB11 1JG

09:00 - 11:00

A night at the races
1.png.png
LBV Hub Dinners / Balls
02 May 2025 - 02 May 2025

A night at the races

Morecambe FC, Morecambe, LA4 4TB

19:00 - 23:59

Research and Knowledge Exchange Showcase
13421_research_knowledge_exchange_2025_600x300.jpg.jpg
LBV Hub Awards
07 May 2025 - 08 May 2025

Research and Knowledge Exchange Showcase

University of Central Lancashire , Preston, PR1 2HE

09:00 - 17:00

Advertise with us

Reaching 50,000 members, our print, digital and event platforms offer a fantastic way to raise your business profile and help you grow.

Find out more Lbv121 Online Graphic
Subscribe now

Weekly news bulletin