When To Take A "Haircut"

We remember during the lockdown the photos that were being posted online of people’s new hairstyles following the closure of all the barbers and hair salons, resulting from attempts by people to cut their own hair. It humoured us greatly but also highlighted (sorry for the pun) just how important people’s hair is to them and what a fundamental part of their identity that it is.

That sense of identity which is intrinsically linked to a person’s hair is much more than just its style, made up of various factors such as length and colour. Hair has been given a sense of significance for as long back as we can remember, from the days at primary school when we were being told about the story of Samson who drew his strength from his hair. And yet it is symbolic in so many other ways too.

No, we are not pitching for a job in the beauty industry, although we have had some unexpected offers from companies to collaborate with them recently which we would not have predicted before we started, and which we declined in order to maintain our image and values. However, we have come to learn that a persons hair has actually found its way into business terminology unbeknownst to us until a few years ago.

Picture the scene, we have been plugging away at a very old, disputed debt for approximately 2 years and it has become apparent after exploring every possible avenue to try and make even the tiniest amount of progress on the full recovery of it, which was quite large in value, that there is nowhere left to turn. In other words, we had concluded that despite our very best efforts, the only viable option left was to do a partial write off, and a considerable one at that.

Writing a debt off, even partially, for us can mainly give rise to one or two feelings. Either, it is a deep sense of disappointment and frustration culminating from the knowledge that our best attempts to collect it, have just not quite been enough to collect it in in full, or it is a sense of satisfaction knowing that our client has done the right thing and often learnt a lesson in the process about things which could be done differently next time to prevent another write off.

In this case, it was a sense of disappointment and frustration as at certain points throughout the journey of that debt over the last few years it looked like there was a possibility of us obtaining payment for the full value of the debt. We are not going to discuss the intricacies of that in this blog but what was now required was for us to gain approval from the owner of the debt to have the balance which remained in dispute, written off. Given the size of the debt and the investment which had been put into the recovery of it by ourselves and them, it would need a case building for it.

So, we set out the facts of the case in an email to the owner of the debt and proposed a partial write-off of the balance of the debt which remained in dispute. Later on that day we received a response from the owner who said “Hi Joe, this will be my first haircut, but reluctantly I think I will have to agree”. “What?”, we thought. Has he sent it to the wrong person? Feeling a little embarrassed we gave him a call to query the response. That is where we learned that a “haircut”, at least to him, meant a write-off.

So back to the original point of the blog, when is the right time to take a “haircut” on a debt? Well, in many cases it will the point at which you cannot say with a high degree of confidence that the claim for payment would stand up in court. This could be due to a whole host of different reasons, but it must be based on evidence. It is a question of looking at what you have down in writing such as the terms of the contract and the emails exchanged between the owner and the debtor.

However, that is far from the only reason that a haircut might be necessary on an old debt. We have come across this recently too. A client had decided to take a haircut on debt not because it would not go in their favour in court (we was sure it would!), but because he felt that the actual money was not retrievable, or enforceable, due to the circumstances of the debtor and that probably saved the client quite a substantial sum of money in legal fees knowing that information.

Further still, and arguably more common than any of the others, particularly in the corporate world is the view that the debt would be better of written off as the client is a valued client and any value lost in the debt will probably be superseded by further orders from the client who is less likely to place more work with them if they know that their favourite supplier has just decided to take legal action against them for payment of an invoice.

However, in all of these cases, what is important to know is that there should be lessons to be learned. We are a stickler for continuous improvement here at JSP Credit Management and we are always looking for ways to ensure that things work out better the next time around if something has not quite met our or our client's expectations. As our motto goes, prevention is always better than cure.

In the cases above, a more thorough due diligence on a prospective customer and a more attentive approach to the billing requirements of their customer, as well as a more careful listening ear to their needs when delivering the service they have come to our client for would have reduced the risk of a dispute being raised on the invoice and also prevented their exposure to the risk of non-payment which they eventually found themselves faced with had it of been done before work began.

We are not being naively ideological. We well understand the conflict pressures businesses are under to get sales through the door, but we once heard somebody say “to make money, you have to spend money” and what we think they meant by that is that sometimes you have to take one step back to take two forward. A little more investment in the front end of the sales cycle can make the world of difference to the back end results in business and for us, the back end is not the delivery of a product or service, it is the payment of the invoice for that product or service. We encourage everybody reading this to adopt the same mentality.

So, have you had to have a haircut lately? If so, we hope it wasn’t a “skinhead” and has left with absolutely no hair whatsoever. Whatever length you have gone for, we would rather see your business boasting locks of strength, just like Samson, so if you are interested in learning more about that, or just want some free no-obligation advice on a debt then get in touch and we will give you the benefit of our opinion.

We are here to do a bit to businesses safeguard their cash flow against late payers or debtors that are refusing to pay, so if you have been struggling to get an invoice paid and would appreciate the support of a team who pride themselves on operating in a way that is mindful of the above then visit our website at and contact us to discuss your needs. We operate on a no-win-no-fee basis for bad debt recovery and our credit control and credit risk services can be ordered via our website with the littlest of hassle.

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