7 tips for business debt recovery
Getting paid for goods and services is at the core of a sustainable business. At Intrum, we lead the way to a sound economy by helping our clients get paid on time.
Bad debts and late payments can lead to layoffs, liquidity problems and bankruptcy. In extreme cases, they can even subject owners and directors to personal liability. That is why it is important to make debt recovery a priority - and not just in times of crisis.
The reality is that few companies can avoid bad debt, however, prevention is always better than cure. No matter how big or small your business is, you should establish and implement measures to minimize the risk of outstanding debt. This will increase the chance of effective recovery initiatives. It will also contribute to the bottom line of the business by avoiding the cost, time and hassle of chasing late payments.
Here are seven things you can do to make payments easier:
Be willing to negotiate the debt
By being flexible and realistic, you can avoid any disputes and increase the likelihood of getting paid. If necessary, a late payment scheme or an instalment plan can be entered into. Always remember to follow up on payment deadlines.
Keep documentation in order
All communication - both written and oral - regarding claims and requests for payment must be clear, precise and detailed. It is important that you can provide the necessary documentation in case the case goes to debt collection or ends up in court.
Learn from your mistakes
Avoid making the same mistake twice by paying attention to the legal terms and conditions of trade. Make practical improvements, such as demanding payment immediately, using credit checks, and continually re-evaluating the billing process.
Ask for professional help early
If your letters and phone calls do not result in a payment, you should, as early as possible, take your debt claims to a professional credit management partner. A debt collection agency specialises in payment trends and debt collection processes, which means that you will often receive payment faster. This frees you up to focus on your core business.
Always comply with local laws
Make sure that you comply with the legal requirements for the reminder and debt collection process, for example with regard to deadlines, costs and fees.
Never make it personal
Threats and intimidation are illegal and may result in you being prosecuted. Do not let the emotions get in the way. Working with people constructively is more likely to result in payment.
Be realistic about the amount owed
The cost of using professionals, such as lawyers, is often out of proportion to the amount owed. Instead of taking the claim directly to court, it can be economical to move the payment through an out-of-court debt collection process first.