Are you stumped when it comes to debt collection and recovering monies owed that are outstanding? Or do you kind of ignore it and hope that it will fix itself? Maybe you just get angry and lose valuable client connections that could have been maintained with the right debt collection strategy.
We advise that to be as successful as possible when it comes to debt recovery to make contact with the client as soon as the debt becomes outstanding, here are the steps that we follow to ensure that your money is recovered quickly and effectively:
Debt collection, whilst it can be effectively managed, is a business problem and can seriously hold up cash flow whilst the money you need is being recovered.
The ideal scenario is to NOT let your business finances deteriorate to this level by implementing some effective business strategies, including talking to a debtors insurance expert such as Niche Trade Credit.
We offer cash flow management services and bad debt insurance (often referred to as trade credit insurance) to businesses that want to safeguard themselves from the negative impact of debtors who cannot pay.
As a business, you are vulnerable when you have an interrupted cash flow so an effective debtors control system is essential as part of your financial management.
Generally in Australia debtors are often allowed more than 54 days to pay their debts that are outstanding. What this means to a business owner is that they are only operating with approximately half of the cash flow that they really should have. This is close to double the 30 days that most businesses use for everyday trading. One of the things that you can do is understand the number of debtor’s days that are outstanding every month to ensure that you understand the effect that debtors are having on your businesses cash flow. read more on about our Credit Insurance Australia.
You can also use the following steps to help reduce the amount that is owed to you or at least help to recover money if it becomes outstanding:
Confirm all payment arrangements with debtor’s in writing
Be proactive and contact clients so that payments are made by the due date
If companies are private get guarantees from the directors
Resolve any client queries quickly
Don’t hold onto outstanding debts – refer them promptly to a debt recovery agency
An effective debtors control system is an essential part of any business’s financial management. The good news is that you don’t need to be an expert to protect your business from the effects of an interrupted cash flow; Niche Trade Credit can take care of it for you.
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Before you refer a file to us for collection it is essential for you to make sure that you have all the information that we need for successful debt recovery.
The information that we need includes:
The debtor’s full name and address, please include any phone numbers for contact and also any third part that is also involved with the transaction
The full details of the debt and if you have previously tried to recover the debt please give us those details as well
Do you have anything that we use for negotiation such as a title, lien, guarantees or security?
Copies of the last statement that was sent to the debtor and a copy of their credit application
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