The debts are the most important assets of the company. No matter if you are having a small, medium or a large business, you have to manage your debts in order to prevent them converting into bad debts. Here we are sharing horrible mistakes you can make while debt recovery.
Not having a credit policy
You should have a transparent and standard credit policy that suits your cash flow and goods and services. The credit policies will provide a uniformity of terms for all for clients. There should be equal regulations regarding the payment and customer protection too.
No Flexibility in credit policy
After creating a credit policy with equal terms for all clients, you should make it flexible for your clients. You can classify the policy as the high-risk and low-risk debtors. This will avoid the potentials of bad debts in future.
Failed to record Up-to-date Information of Debtors
For every debtor, you should be having up-to-date information. Although it is very difficult for you to collect the information, it is essential to get their current residential address, contact number and job description of title of the business they are currently conducting. If you don’t have current and up to date information, then the collection agency will not be able to recover your payment.
Ignoring the cost of debt collecting
There is no certainty with the business as the there is no surety with the profit or loss. Thus, all you need is to take the right step to recover what you are having in order to prevent the loss or to suffer the minimum loss. So, before commencing any campaign with the debt collection agency, all you need is to include the cost of the campaign.
Not following up invoices
There should be a dedicated staff member who is following the invoices created for collecting the debts. From the invoices, you can decide how long you can hold on with your debts.
Not using effective communication
Although phone calls are enough to encourage the debtors to pay, some of the debtors need the encouragement of personal visit in order to pay their debt. Take time to find out what methods of communication you should need to convince debtors for payment.
Failing to ask for professional help
Always persuade professional help, if you are not able to recover debts from any client. The use of professional debt collector is a good step if you are struggling to recover debts for more than two months.
Conclusion
The sole purpose of your debt collection is to maintain the cash flow. You should avoid these mistakes in order to get good cash flow to your business.
Not having a credit policy
You should have a transparent and standard credit policy that suits your cash flow and goods and services. The credit policies will provide a uniformity of terms for all for clients. There should be equal regulations regarding the payment and customer protection too.
No Flexibility in credit policy
After creating a credit policy with equal terms for all clients, you should make it flexible for your clients. You can classify the policy as the high-risk and low-risk debtors. This will avoid the potentials of bad debts in future.
Failed to record Up-to-date Information of Debtors
For every debtor, you should be having up-to-date information. Although it is very difficult for you to collect the information, it is essential to get their current residential address, contact number and job description of title of the business they are currently conducting. If you don’t have current and up to date information, then the collection agency will not be able to recover your payment.
Ignoring the cost of debt collecting
There is no certainty with the business as the there is no surety with the profit or loss. Thus, all you need is to take the right step to recover what you are having in order to prevent the loss or to suffer the minimum loss. So, before commencing any campaign with the debt collection agency, all you need is to include the cost of the campaign.
Not following up invoices
There should be a dedicated staff member who is following the invoices created for collecting the debts. From the invoices, you can decide how long you can hold on with your debts.
Not using effective communication
Although phone calls are enough to encourage the debtors to pay, some of the debtors need the encouragement of personal visit in order to pay their debt. Take time to find out what methods of communication you should need to convince debtors for payment.
Failing to ask for professional help
Always persuade professional help, if you are not able to recover debts from any client. The use of professional debt collector is a good step if you are struggling to recover debts for more than two months.
Conclusion
The sole purpose of your debt collection is to maintain the cash flow. You should avoid these mistakes in order to get good cash flow to your business.
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