Debt collection can be an uncomfortable process not only for debtors, but also for creditors. Here we share four tips from our experts to help businesses understand the process and hopefully achieve an ideal result when recovering a debt.
Accounts Receivable
A favourable debt collection result starts with the internal accounts receivable process. Accurate and detailed records of the debtor and the debts could help you (and the debt collection agency) to quickly identify overdue debts and develop one best recovery strategy. It includes but not limited to the debtor’s name, ABN (if applicable), email, phone number, address and reasons for non-payment et.al.
Do Not Delay Actions
One of the most important success factors is the days overdue, remember the quicker you take action, the higher your chance of recovering your debts. Ignoring unpaid debts or delaying action means you are less likely to recover your money; even if you don't spend any extra money with the debt collection agency, you will lose your money if they are unable to chase it back.
Have A Standard Operating Procedure
How do you decide when to begin actions? And what steps should be taken to get started? Many small business owners start with phone calls, and/or follow up emails every few weeks. This may work well for general accounts or good paying customers, but it is not enough for high-risk customers (eg slow paying the whole market not only your business). It is important to send reminders and final notices together with phone calls, so you’ll be more likely to recover the debt. Get in touch with us if you are looking for reminder and final notice templates– it is free.
Talk To Your Debt Collection Agency
If the delinquent debt brings you concern, or generally speaking when it reaches 50-60 days overdue, you should talk to your debt collection agency and see whether you need to proceed with external debt recovery actions. You may want to save some budget in terms of debt collection fees, however bear in mind that getting your money back is the most important thing, you’ll lose the whole amount without a win (debt recovery rate drops as time goes on).
Contact Xservices if your client is not paying invoices in Australia. Experienced with more than 20 industries, our debt collection experts can provide professional advice regarding overdue debts. Our services cover Melbourne (Victoria), Sydney (New South Wales), Brisbane (Queensland) and Perth (Western Australia), no matter where you are, we CAN help.