Due to the ongoing global situation, a large number of business owners have experienced significant problems with their cash flow. As such, many business owners are turning towards a debt collection agency to assist them in dealing with clients who have outstanding debts. Debt Recovery focuses on specific collection actions that enable business owners to collect over 60% of their outstanding debts in a very short amount of time. Most debts that are overdue by over 30 days have seen a significantly higher chance of being cleared as compared to debts that have been outstanding for three months. In fact, if the debtor defaults on payments for up to a full year, then the chance of repayment drops to almost 20%. As such, Australian businesses need to have a debt recovery process that allows them to efficiently and effectively collect any outstanding debts.
Here are a few tips to help you recover debt quickly even if you do not opt for a debt collection agency.
The primary focus of a business owner when signing a contract with a party is to place a special emphasis on the business owners Terms and Conditions early on in the relationship. This allows the customer to get acquainted with the legally binding contract that they are signing up for and it makes clear any expectations and responsibilities that lie on the client when it comes to repayment from the very beginning itself. In the event of a business owner requiring the services of a debt collection agency, or worse legal action, these legally binding contracts can be easily used to prevent the matter from escalating even further.
Any failure to specifically outline your terms will eventually leave the business owner at the behest of the customer’s convenience when it comes to repayment. This makes debt recovery significantly harder, and further compromises the cash flow position of the business.
Any client who is in debt will often be reached out to in order to remind them of their outstanding payment. Unfortunately, many business owners still stick to the age-old adage of sending a written commercial debt collection communication. This is found to be extremely low when it comes to effectiveness which is why the ideal option recommended by most banks and professional debt collection agencies is directly calling the client. This is not only more effective than sending a written communication, but it’s also far more economical.
When speaking with the client, it is important that the service representative is confident and has multiple responses prepared for any reasons given by the individual in debt. Many customers will often claim that they have not received the invoice that outlines their outstanding amount. In such situations, it is ideal to send them an invoice over email while you are still connected to them on the phone and subsequently ask for confirmation of receipt. More common strategies include inquiring about the expected payment date and further confirmation before closing the communication. This enables the business owner to get a confirmation of the debtor’s commitment.
Having an interruption in the cash flow is one of the biggest and most harrowing problems that can be faced by a business owner. In such situations, it is common for the business owner to get frustrated and emotional about the situation they are in especially when it is the customer’s fault that they are in the situation in the first place. However, getting flustered does not solve the problem at hand in any way which is why it is crucial that business owners keep their emotions in check, allowing them to think with clarity and focus on the best possible solution for getting their payment.
Oftentimes, the debtor will state financial hardship as the primary reason behind the inability to pay back their outstanding amount. In these situations, it is wise to offer a payment plan option as it not only gives the client a feeling that they are being heard and understood but also ensures that your payment is done in completion even though it is done over an extended period of time. Furthermore, alleviating the pressure on the customer to pay the full amount at once also helps them get into the mindset of beginning the repayment process.