Debt Recovery Tips

Are You Throwing Money Away by Chasing the Wrong Debts?

image1Every Accounts Payable department knows that there are two types of debtors: those who won’t pay and those who can’t pay. Identifying where your debtors lie will save you a great deal of time and money when trying to recover debts.

Won’t Pay vs. Can’t Pay

If a client won’t pay, your debt collection efforts are likely to have little or no effect. Your best recourse is to hand the matter over to a professional debt collection agency and pursue legal options.
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7 Things to Know About the Management of Debt Recovery

Most business owners will testify that without cash flow a business is unlikely to survive and certainly will not prosper. If your business extends credit to its customers, it is vital that you also have a robust debtor collection system so that cash is constantly channelled back into your business.

So, what is important to know about the management of debt recovery?

1) A systematic approach to the management of debt recovery is required. Within your business, or outsourced by your business, responsibility for debt recovery should be clearly defined. Particular people should be tasked with responsibility for chasing up invoices and addressing debtors queries and liaising with debt recovery services as necessary. These tasks should be the remit of specific individuals as this prevents others staff from being distracted from their core work duties.

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4 of the Best Ways to Get Payment from Your Debtors

For businesses that extend credit to their customers, late payment or complete failure to pay is a reality. While there are many reasons why debtors do not pay, no business should willingly accept that these accounts should be written off without proactively implementing strategies to try to recoup funds.

Of course, debt recovery services can be of tremendous support in helping a business receive the money it is owed, but before such a service is accessed, businesses should utilise the following approaches:

1:  Develop clear contracts

Before you enter into an arrangement in which you offer credit, it is vital that your terms of payment and a contract for the work being done is put in place and clear. It is important to note that a contract can exist whenever your business agrees to carry out a service or supply goods for payment, regardless of whether the contract is in writing. However, it is often preferable to have documents in writing and officially signed.

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How to Avoid Writing Off Bad Debts

When your business extends credit to its customers, you provide an advantage to your customers as they can use the products or services immediately and finalise payment for them at a later date. However, this arrangement also can put your business at a disadvantage when losses are incurred as a result of customers failing to pay.

Many businesses that offer credit to customers designate a percentage of their sales that will be ‘written off’ as bad debts – debts that will not be paid. While bad debts may be a reality for many businesses and something that is factored into their ultimate success and profitability, having to absorb the expense of unpaid debts can be expensive and financially crippling for businesses.
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5 Best Ways to Recover Debt

Maintaining customer accounts and ensuring positive cash flow for your business can be a smooth process if you have the right procedures in place and follow them. If you need help at any time a debt recovery agency can assist not only for persistent and bad debts but with general debt collections.

The best way to recover debt is to ensure you have an efficient accounts receivable department. This might include the use of accounting software for printing and recording invoices. Aged receivables reports also need to be checked regularly so that debts don’t move outside your trading terms. Keep customer contact details up to date so there’s less chance of mail being returned unopened. Listed below are five other ways to recover debt.
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