One of the biggest challenges facing business owners on a regular basis in the current economic situation is managing cash flow. Negative cash flow is typically the result of either ineffective debt collection tactics or a lack of processes to guarantee timely and effective cash collection.
How can you then increase cash flow, avoid bad debts, reduce loss, and move your company in the right direction? Here are our top 5 suggestions:
The Written Agreement
While a verbal contract is legally binding, sometimes it is very hard to prove what your verbal contract was in detail, and therefore lose the opportunity to enforce the contract. One of the best solutions is to set a written agreement, it can be a formal agreement drafted by lawyers or even a credit application form will do in most cases. Having written terms and conditions on the agreement would clearly set out what goods and/or services you are providing and how you will be paid. It will largely reduce disputes and increase your chances of getting paid.
Know Your Customer
Whether there is a written agreement in place or not, businesses need to know their customers. We saw many clients that know nothing about their customers, have no idea of their ABN, don’t know the full name of their customers, no email, and sometimes only have a phone number. Theoretically speaking, a debt can still be chased under this situation, however, the creditor is almost certain to incur more costs during the debt collection process, the debt recovery process will cost more time, and the likelihood of recovery will be lower than those creditors know their customers.
Retain Proofs
Besides written agreements, proofs are important in resolving disputes. For instance, purchase orders from customers and signed proof of delivery. When we had a debt collection appointment from a customer who is a fresh produce wholesaler, we were advised by the debtor that he did not make the purchase. Subsequently, we spoke to our client for evidence, and the client advised that when this customer picked up products from their warehouse, the person in charge wasn’t available, so they did not issue a picking slip and just let the customer take the goods and let him leave. Although the manager came back after and issued a picking slip, it was not signed and they did not communicate this order with the debtor in writing. A few months later, when their relationship broke and the creditor started chasing these unsigned orders, the debtor denied them.
Find A Reliable Debt Collection Expert
No matter how well your internal debt recovery process is, it just happens that some customers don’t pay on time. So it is important to find a partner debt collection agency with professional debt collectors on the panel. You could speak to them when there are delinquent debts. Make sure you won’t take action too late, so your debt collection firm will be more likely to successfully recover the debt for you.
If you have any enquiries regarding debt collection, do not hesitate to give us a call. Xservice Debt Collection is a professional recovery agency, our services cover Victoria, New South Wales, Queensland and Western Australia, no matter where your debtor is located, we can help. On top of debt collection services, we can also assist you with accounts receivable management and credit control. No matter how special your debt is, we can provide you with the right advice for the best possible action. Partnered with reputable law firms and insolvency management companies, we can provide the best strategy to recover your debt.