6 tips to help small businesses succeed at debt collection
When you’re a small business, you simply can’t afford to have outstanding debts that leave your own cash flow – and operation as a whole – at risk. In fact, issues with non-payment are one of the biggest issues that successful SMEs have to grapple in order to remain profitable and solvent. So what approaches can your small business take to get ahead of the game?
1. Be calm
It’s natural to get frustrated when a customer hasn’t paid you, but it’s vital to remain calm, professional and efficient to retain the psychological edge. Show that you are approaching the topic in a process-driven way with the law on your side and you will be taken seriously. With this in mind, also be friendly and calm to encourage the same from your debtor and to retain a good relationship. Going in and shouting the odds will make matters worse and could cause the customer to be even more stubborn and you will never recover the debt that way.
2. Know the law
The law surrounding debt collection and businesses can sometimes be complex, but a credit collections agency can help you by delivering a compliant service on your behalf. Debt recovery services are up to date with the latest regulations and can use them for the best outcomes.
3. Document processes
Keep records of every interaction when you are chasing a debt, as this will be essential if the matter does progress to court.
4. Consider settling
Long-term delinquent debts may simply cost you more in terms of time and wasted resource than the balance owed. In certain instances, consider offering a lesser settlement payment on the understanding that it is made immediately. It may be financially more appealing to you than a failed debt that is never collected.
5. Don’t harass
If you are keeping your debt collection in-house, remember that you must remain professional and not harass customers. If you call debtors daily and risk sounding aggressive it will impact your own reputation and place it on the line. Be measured, professional, calm and considered.
6. Use professional help
A collections agency can apply cutting-edge techniques and processes to your small business’s debt recovery activities, freeing up your own internal resource for more value-adding tasks. The costs can often be more attractive too than maintaining an in-house resource and offer a better success rate for debt collection through the ability to access specialist skill sets.