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Debt recovery can become extremely difficult, and more often than not, it’s not as clean-cut as one may think.
It requires a lot of negotiating, boatloads of patience, and huge amounts of effort – these are things that a busy business owner may not always have the luxury to do. With so much on their plate already, it’s no surprise that debt recovery often ends up getting pushed back and neglected.
However, with the right company to handle debt recovery perth business owners will be able to recover from debt much more smoothly and easily. In this article, we’re going to cover a few ways on how accumulated debt can be lessened, as well as prevented, to begin with.
How to Avoid Debt
Debts accumulate, and they accumulate fast. One of the most important things you can do to avoid this is to prevent the debt from occurring in the first place. Here are three simple things that you can start doing, all of which are simple and in the best interest of your business operations.
Improve Your Terms and Conditions
If you don’t already have this document in place, it’s high time you start implementing one. A terms and conditions contract is a legally binding agreement between a business and its consumers, wherein it is stated how transactions should be conducted. This includes everything from payment schedules, shipping and handling, refunds and returns, and more.
If you do already have one in place, go over it again with a professional. For example, certain statements in the document might technically allow your clients to incur debt, or it might turn out that your terms are too flexible. While your terms should be fair to your customers, they should not have a negative impact on your cash flow.
Send Out Invoices On Time
As a business owner, you must send invoices out immediately. After all, this is what informs your clients of how much they need to pay and when they need to pay it.
If your payment terms offer net -30 days, remember that those days begin to count as soon as the customer receives their invoice. This means that even after you have successfully delivered their order or finished a service, as long as an invoice hasn’t been sent out, then the client has no obligation to pay up.
Follow Up
Don’t always assume that your client will hold up their end of the bargain every time. Be forthcoming and take the proper measures to remind them of their deadlines. And if they have failed to settle payment in time, you have every right to remind them again of the agreed-upon date.
Three Effective Recovery Strategies
While situations may vary, debt collectors have used these strategies repeatedly to fulfill their one goal: to make sure the debts get paid. So when you find yourself in the position of having to collect the accumulated debt, here’s what you can do.
Observe empathy
The conversation with the debtor doesn’t have to be unpleasant. Be polite and ask them for their reasons for not paying. You might find that sometimes it’s as simple as er forgetting the due date, while other times personal problems may have come into play.
When a debt collector approaches the situation with empathy, it gives both parties a clearer understanding of dealing with the case at hand. This gives you a better opportunity to provide smart solutions for both you and your client.
Initiate a solution
Constantly demanding payment will most likely have your pleas falling on deaf ears. Save yourself the trouble and instead come up with a solution as soon as the situation arises. This puts less pressure on the client, which in turn might make them more open to accepting the solution you offer.
This can help the customer manage their finances better and get you your money back when done properly.
Be flexible
To begin with, make sure that your terms for payment offer enough flexibility for both parties. Though it is important to be firm, be flexible enough to give enough leeway for the client. People are more likely to listen and cooperate with a debt collector that they can communicate openly with.
You may also like: 8 Ways to Get Out of Debt Fast
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