With a large majority of business owners experiencing cash flow problems over the last 12 months, it is vital to ensure that business owners are prepared to deal with customers who have outstanding debts.<\/p>\n
Did you know that debts overdue by one month have a 93.8% chance of being paid, whereas debts after 3 months only have 74% chance of payment \u2013 this drops to 24% if the debtor hasn\u2019t paid after one year!<\/p>\n
It is these statistics that highlight that Australian businesses really need to have a sufficient debt recovery process in place to help collect debts quickly and effectively, so we decided to provide 5 very useful tips to help you recover debt quickly and professionally.<\/p>\n
1. Ensure Your Terms are Agreed Upon<\/strong><\/p>\n Placing emphasis early in the relationship and having your terms and conditions signed by all parties creates a legally binding contract which will set clear expectations and responsibilities for all involved from the outset. Should the matter escalate, this can obviously be used if you ever require the services of a professional debt collector or take legal action.<\/p>\n If you don\u2019t outline your terms, then you may be left at the mercy of your customers\u2019 payment process, impacting your ability of maintaining a strong cash flow position and making it harder to recover money owed.<\/p>\n \u00a0<\/strong><\/p>\n 2. Call the Client Regularly<\/strong><\/p>\n Calling a client who is in debt once a week is significantly more effective and economical than sending written debt collection communication.<\/p>\n Be confident when you are speaking with your customer and be prepared for their responses by having a follow up process for whatever they may say. For example, if the customer says that they have never received the invoice, then email them a copy while they are on the phone, and confirm they have now received it.<\/p>\n To understand when your overdue debts will be paid, ask them when you can expect payment and confirm the date and payment method before closing the call. This will hopefully confirm a commitment from the debtor and have verbal confirmation of when you can expect their account to be reconciled.<\/p>\n \u00a0<\/strong><\/p>\n 3. Be Cool and Calm When You Collect<\/strong><\/p>\n It is easy to allow our emotions and frustrations get the better of us when our customers don\u2019t pay their bills, however it is important that we keep our emotions in check as it will allow us to think clearly and work out the best solution for getting paid on time.<\/p>\n If through your process of trying to recover the debt you sense, or are told by the debtor they are experiencing some level of financial hardship, consider offering payment plan options so that you are eventually paid what is owed to you and the customer is under less pressure to pay the full amount up front.<\/p>\n \u00a0<\/strong><\/p>\n \u00a04.\u00a0<\/strong>Put it in Writing<\/strong><\/p>\n If your phone discussions have not been positive or payments are still outstanding, then consider putting it in writing and sending a letter. The letter should outline the breach of terms, the amount outstanding, and a record of your attempts at contacting them in seeking payment.<\/p>\n <\/p>\n 5.Engage a Debt Collection Service<\/strong><\/p>\n If all your options are exhausted and you are still unable to collect your payments, then engaging a professional debt collection agency<\/a> is your next best option.<\/p>\n If you don\u2019t have a formal contract with the customer, then make sure that you have a complete record of the work which was carried out and as many details as possible so that the collection agency can successfully recover your funds.<\/p>\n