7 horrible mistakes you’re making with debt recovery
1. Not having a credit policy
You must have a robust and clear credit policy in place before you provide goods or services and receive payment for them. A credit policy provides uniformity of terms across all your clients and means that you are complying with customer protection regulations too.
2. Not being flexible with your credit terms
Although you must have a good credit policy in place, you must also be open to a degree of flexibility. As you get to know your customers over time, you will begin to profile those who are high-risk and those who are low-risk. Regular reviews of your customer profiles will enable you to tailor your credit terms accordingly, potentially avoiding the need to take debt recovery action in the future.
3. Failing to collect enough up-to-date information about the debtor
If you don’t keep your client records up-to-date, it will be very difficult for a debt recovery company to recover the debt for you. In the first instance, if you don’t have a current address for the debtor, any debt related correspondence will be returned to you and doorstep debt collection will be impossible.
4. Ignoring how much debt recovery will cost your business
Before commencing any campaign to recover a customer debt, you must evaluate what costs your business will incur in doing so. If your initial attempts at debt recovery have failed, you’ll need to calculate whether obtaining a county court judgement and then enforcing it are actually financially viable.
5. Not following up invoices
In order for your credit policy to remain robust and effective, you must train your staff in a formal procedure that will be used to follow up any unpaid or late invoices, and then ensure that they stick to this procedure. Decide for how long you will continue to contact your debtors before commencing formal recovery proceedings, and make sure that all your clients are aware of this.
6. Failing to use effective communication
Often, letters and phone calls are enough to persuade debtors to pay. Some people respond better to emails and others will be prompted into action by text. Take the time to find out what methods your various clients prefer and use them consistently.
7. Failing to ask for professional help
Some debtors can be especially stubborn and you may struggle to persuade them to pay. Often, the use of a professional debt recovery agency is far more effective in recouping your money than struggling for weeks or months on your own.
Keep your company’s cash flow coming by avoiding these 7 horrible debt recovery mistakes. If you’re struggling to persuade a client to pay up, always consult a professional.