5 Best Ways to Recover Debt
Maintaining customer accounts and ensuring positive cash flow for your business can
be a smooth process if you have the right procedures in place and follow them. If you need help at any time a
debt recovery agency can assist not only for persistent and bad debts but with general debt collections.
The best way to recover debt is to ensure you have an efficient accounts receivable department. This might include the use of accounting software for printing and recording invoices. Aged receivables reports also need to be checked regularly so that debts don't move outside your trading terms. Keep customer contact details up to date so there's less chance of mail being returned unopened. Listed below are five other ways to recover debt.
Invoice promptly
The sooner the customer receives an invoice the sooner it can be paid. Ideally the invoice needs to be handed over at the same time as the goods but if you are dealing with a representative of the company it may be better to e-mail or post the invoice. For customers with multiple invoices for the month though, save on postage and send a few out at once. Follow up with an end of month statement showing all the outstanding accounts.
State trading terms clearly
Customers need to be aware of how you expect their account to be settled. This should be agreed to in your terms and conditions when the customer opens an account but should also be stated clearly on all invoices. Depending on your industry it may be unrealistic to expect accounts to be paid within seven or even fourteen days, but trading terms should never exceed 30 days. In the event you have a client that wishes to operate outside your normal trading terms, you must ensure that it is a credit worthy client. One way of finding this out is to conduct a credit enquiry. Debt Collection Agencies are able to assist you in this regard.
Always follow up outstanding invoices
Outstanding invoices left to pile up in your aged receivables will be detrimental to your monthly cash flow so always follow up by sending the invoice again. Advise the customer this is a repeat invoice and start with a friendly reminder notice. Sometimes a quick phone call may be all that is needed to prompt payment.
Send Demand letters if necessary
If debts remain unpaid after the basic follow up you may need to send a letter of request. These should be sent out on a professional looking letterhead and worded in such a way that affirms you will follow up. Give a clear due date and tell them what you will do if the debts is not paid by then.
Debt collecting is all about being consistent in your methods and following through with your intent to have the account settled.
Engage a debt recovery agency
There will be times when even a letter of request will be ignored. Do not delay if this happens and engage a debt recovery agency. Debt collection agencies are experts in debt recovery and will give you the best chance of recovering outstanding debts.
Summary
Recovering debt is essential for the healthy growth of any business. Review your accounts receivable department and ensure invoices are sent out regularly and there is someone to monitor debts that aren't paid within your trading terms.
5 Best Ways to Recover Debt
By: John Zukerman
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