What Are 6 Steps to Help You Avoid Writing off Debts?
When you are in business, on-time payment is critical. You need to set up parameters when you first open your doors so you can collect your money according to a given schedule. Late payment is problematic, but non-payment is critical, and in a worst-case scenario, you may have to write off an invoice and deem it "uncollectible." So how can you avoid getting to this position in the first place and reduce the risk as much as possible?
1. Establishing Strategies
You should establish some credit management strategies and ensure that you always follow your rules. If you do so, you can mitigate the likelihood of non-payment and call in professional help if needed.
2. Conducting Credit Checks
Before you take on a new customer, check to see if they are solvent. You can use one of many different credit check companies to get an accurate picture of what you're dealing with. Depending on the nature of your relationship, you may also want to perform credit checks from time to time with your existing customers. Either way, you may get some advanced notice of potential problems and take additional steps if needed.
3. Gathering Information about a New Client
You should also gather as much information as possible when filling in any account opening form. Ensure that you gather various contact details together with an alternative point of reference within the business. In other words, don't deal with only one person, but have another contact just in case the primary goes missing in action. You may need to amend your account opening form and include more data fields than you may have.
4. Clarifying Your Terms and Conditions
Are your terms and conditions clear enough? Don't just require customers to say they have read them, as most will not. Call their attention to any dispute resolution clause and ensure that it is time-bound. In other words, they only have a certain amount of time to raise a dispute that may affect payment.
5. Taking Timely Action
Do not let things slide but always have a formal process involved whenever an invoice becomes past due. You should make a courtesy call the day after the payment has not materialised and follow up as needed thereafter.
6. Bringing in a Debt Collection Agency.
If you're still having problems collecting an invoice, don't write it off automatically before you turn to a specialist debt collection agency. Certainly, you should not rush to this position and give the customer adequate time, but the professionals may help you arrive at a swift conclusion when you're ready. A debt collection agency can take steps to capture your missing payment.