The ‘Prince of Wales’ or the ‘Prince of Wales’ – Know Your Customer!
Wednesday 14th January 2015
It was interesting to see the BBC’s report about the Prince of Wales pub near Stanstead Airport receiving a British Gas bill addressed to the Prince of Wales aka HRH Prince Charles (http://www.bbc.co.uk/news/uk-england-essex-30785367). Although it’s unlikely that our future king is struggling to pay his bills, this mistake comes as no surprise to me.
Whilst this is an extreme example, it is very common that businesses can’t properly identify their customers. These customers become debtors when bills go unpaid and in such cases, those responsible for collecting debts can go to extreme lengths to identify and locate the debtor. Often, untrained staff take a blanket approach. A real life example (not one of my clients I should add) was where a Doreen Hogan (name changed) owed a business £152.00 The business couldn’t locate her, so sent a letter of demand to the 25 D Hogans in the county where they believed she lived. Obviously the recipients of those letters replied (none of whom were the actual debtor), resulting in wasted staff time and costs for the business. The wasted time and costs far exceeded the value of the debt which ended up uncollected.
Why do I mention this? Very simple: the better you ‘Know Your Customer’ (KYC) the more chance you have of being paid, especially if you have to make a court claim. KYC is an important tool in the credit controller’s and debt recovery solicitor’s armoury. It’s also an insurance policy for businesses should a bill not be paid. Like any insurance policy, you don’t want to have to rely on it but, if needed, you can call on it.
We work with businesses to improve their bad debt recovery rates, encouraging them to improve due diligence when opening a new account and recovering bad debts on their behalf. Training those who open accounts to get sufficient information from new customers is also vital. The information gathered at the outset is likely to be accurate; the customer will usually want to trade with your business, so will give you the information you need to get the account open. With accurate information, we can often establish what assets the debtor has, whether they are working, who they bank with and, of course, where they live or operate their business from. Information is key.
We may never know why the landlord of the Prince of Wales received that letter, but it highlights an important issue for all businesses who give credit to addresses: KYC!