Debtors will always be a part of life, whether in business or personally. Debts are needed to be managed well since they are a crucial component of every organisation. Business owners need to bear in mind that debt collection is not easy, hence a good credit policy must be in place for you to be effective in managing accounts receivables. It is almost impossible for a company to avoid debts, despite the fact that some firms operate on a cash-only basis which may affect business scaling in some degree. Since you’re here, we assume you are trading on credit with your customers, so let’s have a look a number of things that a firm needs to understand.
Plan Ahead
There are many great debt collectors or lawyers assisting creditors with debt recovery, however, take note that a proportion of the success rate of your debt collectors has been predetermined by businesses internally. Before the debt arises, you’ll need to structure the credit management procedures in a way that makes subsequent debt recovery easy. Which means, in other words, that planning ahead may contribute to approximately a 30% to 50% success rate of a reasonable debt.
Know Your Customer
Also known as KYC, it forms the basic requirements to chase a debt, even with professional debt collection agency. For instance, know your customer’s full name not only nick name; phone number; email; address and ABN if applicable. The debt collection procedures are certain to be affected without any of the above, such like enforcement actions cannot be taken without the full name (or ABN) of the debtor, your debt collectors are hardly able to negotiate with the debtor without a phone number, you may be unable to take legal action against the debtor without an address, and an email can accelerate the debt recovery process by delivering notices and letters.
A credit check can be an add-on to the general information about a customer. Especially if your customers are businesses, a credit check can identify potential defaults with other suppliers and see if they are switching suppliers because of delinquent debts.
Proper Terms of Trade
Setting up a proper trading agreement with your customers can significantly reduce disputes, and therefore increase the opportunities for collecting debts. It happens that good customers become bad when you are demanding overdue debts, they may intend to raise new disputes without a proper contract, in which case the creditors may have to compromise (eg by providing a discount) in order to get payment, or spend money to get a clear judgement via the court to determine the dispute.
If you need debt collectors Melbourne, Sydney, Brisbane or Perth to help you chase back the accounts. Or have debtors located in Victoria, New South Wales, Queensland or Western Australia, contact Xservice Debt Collection for an obligation free assessment. No matter you are a small business or a medium to large enterprise, we CAN help.