A steady, positive cash flow is crucial to the success of any business, especially one that’s still small and starting out. But to maintain this, you need to make sure you always get paid for the products and services you provide. This is where debt collection comes in.
Small business owners might balk at the idea of doing collections themselves. It’s certainly not the most exciting part of running a business. Plus, it does require a lot of time and manpower, which is why many entrepreneurs consider hiring a debt collection agency for small business instead.
But calling in the experts is only one of the many steps you can take to make the debt recovery process more efficient. Here are a few more you can use:
1. Put your payment policy in writing
When it comes to collecting payment, handshake deals and verbal agreements just won’t cut it. They are unofficial and very difficult to enforce. The best way to seal the deal is with a written contract that clearly states the specifics of your agreement with the client.
Among the details that should be included in this contract is your payment policy, which should contain everything from the exact due dates to the payment methods you accept. Also, do not forget to include a clause that outlines the potential fees and interests for late or delinquent payment.
2. Keep the lines of communication open
An effective debt collection strategy is built on communication and transparency. Be open to your clients about your payment process and expectations. Make sure they fully understand your payment terms, including your late fees. This way, you avoid misunderstandings and ensure smooth transactions.
Whenever you communicate with clients, remember to be polite and professional. If your clients are experiencing some difficulty paying right away, show compassion and be open to negotiating your terms. Try to come up with alternative solutions that work for both of you, instead of giving them an ultimatum. This shows that you’re still dedicated to maintaining a business relationship with them and are not just interested in taking their money.
3. Take action immediately
Don’t wait until the last minute before you start collecting payments. If you notice a couple of invoices are nearing their due date, contact the clients right away to remind them. It would also be a good idea to place a temporary hold on their accounts until you receive payment.
If you still don’t hear from clients after several attempts at communicating, consider turning them over to debt collectors for small business accounts. The sooner you take action on overdue invoices, the higher your chances are of successfully collecting payment.
4. Hire a debt collection agency for small business
Hiring professionals that specialise in small business debt collection can save you a lot of time and effort, especially if you have a lot of outstanding debt to recover. They have the skills and experience to help you deal with delinquent accounts. Plus, they can offer sound advice on how you can improve your procedures so you can further secure your cash flow and avoid any legal trouble. For best results, make sure you choose a debt collection agency for small business that specialises in your field or industry.
5. Document every step of the process
Documentation is crucial in small business debt collection. Precise and detailed records of this entire process will help you stay organised so you can be more efficient. Plus, proper documentation will come in handy should legal actions become necessary. Make it a point to take note of every instance you call and speak to clients. Likewise, certify and copy all emails and letters you send them. If you conduct office visit, record them in a log book as well.
Slater Byrne Recoveries is a leading debt collection agency for small business in Australia and New Zealand. We have a team of debt collection specialists who can help you with everything from updating your payment policies to recovering the most delinquent accounts.
Liam White joined the Slater Byrne Recoveries team in early 2013. He has worked across the credit & dispute resolution industry for a number of years. He is currently working in a Marketing/Head of Sales capacity at Slater Byrne Recoveries.