Debt recovery can be a difficult and time-consuming process, and if you hire a dedicated debt recovery specialist it can become expensive too. That means it's important to avoid the risk of a debtor not paying what they're owed. To mitigate that risk, it's up to you to do the necessary background checks before you lend even a single penny.
What Should You be Looking For?
When it comes to lending, you want to make sure the person you're lending to or who is buying an item or finance is as financially responsible as possible. This means they have a much higher likelihood of paying you back. To do that you're going to need to do a little homework on them before you agree to lend.
The first thing to do is to make sure that the details they have provided are authentic. A postal address and working phone number are a minimum. You can also do a quick search of them online to see if anything comes up - see if they have left any reviews anywhere, or if they have a social media presence that might give some insight.
It's also worth investing a small amount in getting a proper credit check done on them. This is a very wise investment. It can tell you if there are any problems lurking in someone's financial history. You can see if they have a past record for non-payment of debts, or if there are existing or previous financial judgements against them. Everyone has a misstep from time to time, so exercise your discretion, but it can help to make sure that you're at least informed.
Why Should You Do This?
To use a metaphor - it's much easier to step around a puddle than to dry yourself off after walking through it. If you see someone has a problematic financial history or hasn't provided you with accurate contact details, it's better to know these things before you have given them a loan, or you have allowed them to purchase on credit.
If you would like more information about appropriate checks you should be making on potential debtors, contact a legal professional for guidance. At Bowsers Solicitors, for example, we can help you understand the basic checks you should be making to avoid getting into a position where debt recovery is needed.
Investing in understanding how to protect yourself from bad debt is always prudent, so contact Bowsers Solicitors today to learn more.
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