Should you spend money chasing a debtor in court?

Most business owners at some stage have to decide whether it’s worth taking a debtor to court. This guide offers some tips on how to handle that process and arrive at a businesslike decision.

Practise prevention first

Sound management of your credit accounts is the best way to avoid going to court. The related Solution Guides ‘Five steps to make sure you get paid’ and ‘How to collect debt’ show you how to eliminate problems in advance. These methods may be briefly summarised as follows:

• Check the creditworthiness of all customers.
• Reduce exposure to large orders by asking for deposits, part or progress payments and personal guarantees.
• Create efficient systems for prompt invoicing and effective follow-up of overdue accounts.
• Exhaust all other options (including debt restructuring or post-dated cheque repayments) before you consider the expense of court action.