7 Things You Wouldn’t Want To Hear About Debt Recovery
It is very hard to avoid debts in business. Yet, collecting overdue invoices is not a straightforward process. It usually involves various challenges including difficult conversations and negative impacts on cash flow. Below are some 6 things you wouldn’t want to hear about debt recovery but you should.
Not an easy process
In business, it is okay to provide a product or service before collecting money from the customer. In a normal situation, there would be no need to have credit control in the process. However, it is not always the case. Recovering overdue invoices is a costly and tiresome process. The solution is to always act swiftly whenever an invoice is overdue. Perhaps they forgot to pay, misplaced your invoice, or didn’t receive it.
Some might deliberately ignore paying when having financial hardships. Contacting them immediately shows you’re serious about credit control and late payments are not tolerated. Send an email to remind them that your invoice is due. On getting a response, then you can begin on subsequent communication.
Know when an invoice is overdue
Acting quickly during debt recovery requires knowing when an invoice is overdue. You can only achieve this by regular review of the sales ledger to observe customers’ payment activity. This allows flagging overdue and upcoming payments. This allows knowing when to enlist a global debt recovery firm to go after the defaulters. It avoids delays and reduces the negative impact on your cash flow.
Getting paid requires becoming tough
It is very unfortunate that some customers believe they can get away with nonpayment. During such situations, you need to apply stronger tactics to make them settle their outstanding dues. You should consider strategies like withholding services rendered until payment of outstanding invoices. Alternatively, you should introduce a late payment fine to discourage overdue payments and cover debt recovery expenses.
Record keeping is key
Keeping records of all letters, invoices, phone calls, and emails with customers is very important. These come in handy as evidence through your debt recovery process involving legal action. A copy of your terms and conditions is also very important.
This should clearly state your expectations from clients and their expectations from you right from the beginning of the relationship. Setting expectations helps limit disputes and avoids possible surprises in the future. You should have the terms and conditions signed by the customer before closing the sale.
Some debts can’t be collected
Regardless of the effectiveness and efficiency of your credit control methods, some forces can make collecting some debts hard. Perhaps a customer’s business became insolvent during the coronavirus pandemic. However, with the right strategies, you can make your business safe from other uncollectable debts in the future.
The first thing is to know your customers to avoid giving credit to risky businesses. Additionally, you can protect your cash flow by getting insurance against bad debts resulting from protracted default or insolvency. Lastly, consider asking for full or part payment upfront to protect your cash flow. Some businesses insist on paying after receiving the products or services as a strategy to dodge payment.
Some customers can be dishonest
Failing, to tell the truth, is one of the primary reasons why debt collection is very hard. Some customers do whatever it takes to delay or avoid payment. So, always be skeptical when a customer gives an excuse for dealing to pay. They can be telling the truth or lying. The ability to detect fake excuses allows making the process much easier.
Additionally, give the customer various payment options that make paying easier. Lastly, send follow-up warnings to the customer for late payment. This ensures that they understand the consequences for continuing to delay. So, a professional and persistent approach for debt recovery is crucial. This includes a charge for late payment, taking legal action, and outsourcing a debt recovery agency.
Debt recovery agencies are not the same
The easiest way to recover overdue invoices is to enlist professional assistance. However, you have to choose an agency that will meet your expectations. An online search will give you millions of debt collection companies. However, due diligence is essential to pick one that will live up to its promise.
The rule of thumb is to always find a debt recovery agency before you need one. Searching for one when you need it badly might make you make rash decisions. Looking for one before you need it gives you enough time to weigh your options before selecting the right one for your business needs. Finally, you have to understand the company’s recovery process to know what to expect.
There are various things you wouldn’t want to hear about debt recovery but you should. The process is not easy and some customers are dishonest. Additionally, debt recovery requires time, resources, and some tactics. To save yourself the trouble, hiring a debt recovery agency is a lifesaver.
It is very hard to avoid debts in business. Yet, collecting overdue invoices is not a straightforward process. It usually involves various challenges including difficult conversations and negative impacts on cash flow. Below are some 6 things you wouldn’t want to hear about debt recovery but you should.
Image credit: firstcollect.com
Not an easy process
In business, it is okay to provide a product or service before collecting money from the customer. In a normal situation, there would be no need to have credit control in the process. However, it is not always the case. Recovering overdue invoices is a costly and tiresome process. The solution is to always act swiftly whenever an invoice is overdue. Perhaps they forgot to pay, misplaced your invoice, or didn’t receive it.
Some might deliberately ignore paying when having financial hardships. Contacting them immediately shows you’re serious about credit control and late payments are not tolerated. Send an email to remind them that your invoice is due. On getting a response, then you can begin on subsequent communication.
Know when an invoice is overdue
Acting quickly during debt recovery requires knowing when an invoice is overdue. You can only achieve this by regular review of the sales ledger to observe customers’ payment activity. This allows flagging overdue and upcoming payments. This allows knowing when to enlist a global debt recovery firm (https://www.firstcollect.com/) to go after the defaulters. It avoids delays and reduces the negative impact on your cash flow.
Getting paid requires becoming tough
It is very unfortunate that some customers believe they can get away with nonpayment (https://www.cnbc.com/2021/09/28/how-the-debt-ceiling-standoff-could-impact-your-social-security-checks.html). During such situations, you need to apply stronger tactics to make them settle their outstanding dues. You should consider strategies like withholding services rendered until payment of outstanding invoices. Alternatively, you should introduce a late payment fine to discourage overdue payments and cover debt recovery expenses.
Record keeping is key
Keeping records of all letters, invoices, phone calls, and emails with customers is very important. These come in handy as evidence through your debt recovery process involving legal action. A copy of your terms and conditions is also very important.
This should clearly state your expectations from clients and their expectations from you right from the beginning of the relationship. Setting expectations helps limit disputes and avoids possible surprises in the future. You should have the terms and conditions signed by the customer before closing the sale.
Some debts can’t be collected
Regardless of the effectiveness and efficiency of your credit control methods, some forces can make collecting some debts hard. Perhaps a customer’s business became insolvent during the coronavirus pandemic. However, with the right strategies, you can make your business safe from other uncollectable debts in the future.
The first thing is to know your customers to avoid giving credit to risky businesses. Additionally, you can protect your cash flow by getting insurance against bad debts resulting from protracted default or insolvency. Lastly, consider asking for full or part payment upfront to protect your cash flow. Some businesses insist on paying after receiving the products or services as a strategy to dodge payment.
Some customers can be dishonest
Failing, to tell the truth, is one of the primary reasons why debt collection (https://www.forbes.com/advisor/debt-relief/debt-settlement-how-it-works-and-risks/) is very hard. Some customers do whatever it takes to delay or avoid payment. So, always be skeptical when a customer gives an excuse for dealing to pay. They can be telling the truth or lying. The ability to detect fake excuses allows making the process much easier.
Additionally, give the customer various payment options that make paying easier. Lastly, send follow-up warnings to the customer for late payment. This ensures that they understand the consequences for continuing to delay. So, a professional and persistent approach for debt recovery is crucial. This includes a charge for late payment, taking legal action, and outsourcing a debt recovery agency.
Debt recovery agencies are not the same
The easiest way to recover overdue invoices is to enlist professional assistance. However, you have to choose an agency that will meet your expectations. An online search will give you millions of debt collection companies. However, due diligence is essential to pick one that will live up to its promise.
The rule of thumb is to always find a debt recovery agency before you need one. Searching for one when you need it badly might make you make rash decisions. Looking for one before you need it gives you enough time to weigh your options before selecting the right one for your business needs. Finally, you have to understand the company’s recovery process to know what to expect.
There are various things you wouldn’t want to hear about debt recovery but you should. The process is not easy and some customers are dishonest. Additionally, debt recovery requires time, resources, and some tactics. To save yourself the trouble, hiring a debt recovery agency is a lifesaver.
