How to Collect Debts and Increase Cash Flow, during a Crisis
Recessions, virus epidemics or even just company-specific problems, can all dent the cash-flow and threaten the very existence of your business.
The best way to increase cash-flow is to collect your outstanding debts (account receivables).
So here’s some tips,from a debt collector, on increasing cash-flow by doing your own debt collection.
Follow this guide and watch your bank balance increase!
Keep Calm and Carry On
Your team will be looking to you, as their leader, to keep your cool, during a crisis. A great example of an amazing leader, is New Zealand Prime Minister Jacinda Ardern. Her swift reaction to the Christchurch shootings and her no-nonsense approach to the COVID crisis, has been inspiring.
Your clients will remember how you reacted and how you treated them, during the tough times. People will remember, so make sure you are fair, reasonable and positive, during these tough times. People always think you have to be aggressive to collect debts. In fact it’s the opposite. The cool and calm approach always wins in the end. Your staff and your customers will appreciate if you treat them nicely, during a crisis.
The best strategy to deal with outstanding debts is to try to ensure they do not happen in the first place.
Credit check any new customers. You can do it yourself, using social media (check the directors of the creditor company), ASIC ( check if their company is still registered? Any petitions against it? Any recent changes?) ABN Lookup, company directories, online reviews, Google search the company and the directors. If you want paid reports, two of the top credit reporting companies in Australia are Equifax or illion Express.
Routinely conduct credit checks on existing customers for a more up-to-date picture of their business. Los of businesses will go under during a crisis, so you need to be vigilant during the down times.
Put strict penalties on your invoices and contracts for non-payment. Ask for personal or directors guarantees. Do a full credit check on your prospective customer. See this link for some free penalty clauses and templates you can use: https://debtrecoveries.com.au/credit-control-free-template-pack/
Pick up the phone
A crisis is a great excuse to get closer to your customer. Ring them, say Hi. Ask them how they are doing? Yes, of course you have to have the difficult part of the conversation, about the outstanding debt, but you can still use the occasion to find out a bit more about your customer. You may also be able to glean some information about their solvency and how they are doing financially, in order to assess whether or not you want to continue to do business with them after the crisis is over.
So do not be afraid to ring your customer. This sends them a strong message that you are firm about your terms and that you take account receivables seriously.
Ultimately, the exercise should be used as an opportunity to explore why the invoice hasn’t been paid, reaffirm how important their payment is for your business, resolve any disputes that may exist and explain the steps your business will take if payment isn’t received.
The quicker you outsource to a debt collection expert, the more money you will make. Simple. If your creditor has reached the end of your terms and you are being ignored, send your debts to a debt collector immediately.
Your brand will be protected, so long as you use a reputable debt collection agency. Your customers will see that you are serious about getting your debt paid, since you have now engaged an expert in this field.
If you need assistance with you debt collection, you can contact us
Call Us: +61 1300 799 511