Are You A Sole Trader Owed Money?Last modified: July 23, 2021
Are You A Sole Trader Owed Money?
Here Are 5 Expert Tips For Getting Your Money Back
Being owed money can be a very stressful experience, regardless of what the circumstances are.
This is even more true for those that are classed as a sole trader.
Sole traders operate alone, performing all actions in their small business.
When they are owed money, it can represent a considerable challenge, as they may not have the time or resources available to chase debt.
If this happens, they are often left with a difficult choice, chase the debt or lose the money.
Writing off debt should never be an option, as everyone deserves to be paid for the work they have done.
If you abandon debt your cash flow will be affected, leading to your business being put at risk.
If you are not paid, you will be unable to pay your own costs, and a bankruptcy petition may eventually be made against you.
Are you a sole trader owed money that is facing cash flow problems?
If so, you may be considering the best way in which you can recover the debt owed to you.
In this article, our debt recovery experts explain the best way to prevent or collect owed money.
Sole Trader Owed Money – Preventing Bad Debt
The best cure for bad debt is to stop it from happening in the first place.
Taking steps to research who you are going to do business with can help with this endeavour.
For example, many sole traders often do business with large limited companies.
If they do not pay, the sole trader may be hesitant to chase for payment, as they do not want to jeopardise future opportunities.
Doing some research beforehand can help you manage your expectations.
In this case, some of your contacts or peers may have worked for the company before, and so they can inform you on what you can expect.
Another good method of preventing debt is to request that the customer sign payment terms before committing to an agreement.
It is common for people to provide false information with the intention of not paying at a later stage.
This is so that it is harder for a sole trader business to trace someone that owes them money.
Cross-referencing the personal information that a customer provides you with through a credit checking service is useful.
This will help you to verify who you are doing business with, and could help you to prevent a debt later on.
As well as this, you should make all invoices to your business and personal customers as easy to read and understand as possible.
For instance, you should always clearly state the net amount and the proper time to pay on your invoices.
Many people will go to any length to avoid making a payment, and claiming that they could not read your documents is one tactic.
Sole Trader Owed Money – What To Do If You Have Not Been Paid
If you have provided goods or services that a customer is happy with, you should rightfully be paid.
For example, a sole trader may have provided graphic design work to be used for marketing purposes for a limited liability partnership registered in England and Wales.
If the customer has used this but then refused to pay, you are well within your rights to be paid.
If you have provided goods or services and issued an invoice that has not been paid, there are several steps you can take.
Sending a payment reminder is a very good first step that will prompt many customers to pay right away.
It is important to remain polite and professional in tone, as many customers may have a valid reason for why they have not paid.
Communication is key and ensuring that you are dealing with customers properly will help to secure future business
If you have sent several reminders that have been ignored, you should send on final reminder 30 days after the invoice due date.
In this, you should request payment once more, and state your intentions to take action should the customer not pay.
This could be in the form of taking legal action and court proceedings for money owed.
If your messages fall on deaf ears, it is a good idea to seek professional help.
Sole Trader Owed Money – Professional Debt Recovery
There are many ways for a sole trader to recover an unpaid business debt.
Methods such as legal action through a small claims court are common but normally incur a very high cost.
Instructing a professional debt collection agency is more beneficial, and allows sole traders to concentrate on their core business.
Frontline Collections has helped thousands of sole traders who have not been paid recover their owed money.
We have an industry-leading average debt recovery rate of 90% on all undisputed debt.
For a completely free sole trader debt appraisal, speak to one of our recovery experts today.