How to prevent bad debt for your business
Good credit control is essential in order to ensure that your business remains profitable and is sustainable for the future. However, it is not always easy to manage your cash flow, particularly when you are reliant on customer payment. Here are a few actions that you can take to help prevent bad debt for your business.
Conduct thorough checks and set limits
You should conduct credit checks for every new customer in order to ensure that they have a reliable credit history. Setting up clear terms that are mutually understood by the customer and your business minimises the risk of incurring debt. You may make the mistake of trusting a new customer to pay back a large amount of money based on your previous experience with other clients. But not every customer will have the same attitude towards your terms. Consider implementing a lower credit limit with new customers until you are certain that they will pay you back on time.
Check your invoices
Giving the customer clear and correct invoices can make it more difficult for them to delay paying the money. For example, a customer cannot argue that their payment was late because they didn’t have your bank details if they were stated on the invoice. Consistently monitoring when your payments are due can enable you to stay on top of your finances and give you time to contact a customer if you anticipate late payment.
Seek professional help
If you are struggling to claim back debt from your customers, it may be time to consider using an external collection agency. This is more likely to prompt payment than your repeated attempts at phoning and emailing the customer, as debt collectors tend to have a stronger impact. This enables you to retrieve the money that your business is owed at a much faster rate.
If you are considering using outsourced credit management, contact First Capitol Connections today. We offer a range of services, including credit control, doorstep debt recovery and credit checks that can help your business to thrive.