How do I end up with so many bad debts and what can I do about it?
One of the most ignored duties in company today is debt collection.
When your company receives an order, or possibly even earlier during the quoting or prospecting stage, a debt collection actually gets underway. Effective debt collection is a means of finishing the transaction rather than concentrating primarily on collecting “bad” or delinquent debts. After all, a sale isn’t complete until you receive payment.
Early and regular follow up is the most efficient way to avoid bad debt write-offs.
One of the most underutilised aspects of business is debt collection, according to respected experts. Businesses are frequently discouraged from establishing effective methods to deal with the issue due to the time and expense involved in effective debt collection.
A widespread fear of destroying client connections, a reliance on “handshake” agreements, and the perception that bad debts are inevitable are some other causes of poor credit management.
Debt Recoveries Australia can assist you in establishing an effective debt collection system inside your company as well as in helping you collect your debts more quickly and effectively.
Your debt collection system should include:
• Well-planned procedures intended to hasten the collection of money.
• The application and use of certain procedures.
• In all pertinent business divisions, awareness of and support for the system.
• Continual management evaluations.
Your referral rate to DRA will decrease once this technique is in place, and you’ll also save money and have more cash on hand.
With a solid system, you can: • Collect more money from consumers more quickly, more frequently, and with less expense and stress
• A better cash flow.
• Preventing upcoming issues.
• Increasing customer loyalty.
• Better utilisation of resources.
Any other tips?
Apply a methodical and effective strategy while collecting debt. The best method for managing receivables is a methodical, regulated approach. Create an accounts receivable method that includes billing with predetermined payment conditions, a follow-up call, and a call if the payment is late.
1 – Approach debt collection in a systematic and effective manner. The best method for managing receivables is a methodical, regulated approach. Create an accounts receivable method that includes billing with predetermined payment conditions, a follow-up call, and a call if the payment is late.
2 – Make sure your staff members have received the necessary training in handling and collecting receivables.
3. Keep track of your receivables. Risk is involved when extending credit to another person or business. As long as it is appropriately controlled, this risk is reduced. Receivables that are not managed appropriately risk getting out of hand.
Here are a few red flags to look out for:
• Postdated or NSF checks
• Slow payment or a change in payment patterns
• Broken promises of payment
• Unreturned messages
• Unauthorised returns of goods
4 – Check that the customer is aware of the terms and conditions before issuing credit.
5 – Comply with the beginning conditions. When you establish terms, let the client know about them and then uphold them. Clarify and firmly state your terms and intentions. Create a set of fair terms and conditions that will be included in the sales contract.
6. Intensify your actions. Do not be reluctant to take more aggressive measures if it is obvious that the debtor will not make payment. This may involve demand letters and pre-collection calls, as well as legal action and pre-collection letters.
Keep your promise. Push for a resolution (payment) each time the debtor is contacted during the collection process and decide on the next course of action (callback, repossession, legal action, etc.). Whenever you promise to take additional action to the debtor, follow through on it.
Understand when to seek outside assistance. Your best line of defence against debt is knowledge. Create a clear plan of action and processes. Most importantly, acknowledge that occasionally, other assistance may be required.
Do you want to learn more about how Debt Recoveries Australia can assist you with your invoicing and debt collection issues? Please contact us at firstname.lastname@example.org or 1300 799 511. You can also contact us via Skype at debtrecoverie