Good Debt Collection Practice
No matter what size of business you are, the key to ensuring prompt collection of accounts is to put a procedure in place and make sure it is adhered to. Not only will this mean your money is collected faster it will also have the effect of minimising avoidable right offs.
The first thing we would advise is to identify any potential issues before they become a problem. One way to do this is to contact the customer before the account becomes due and to check they have the invoice, that there are no issues with it and that you can expect payment on or before the due date.
Having the time and resources to carry out these tasks can often be a challenge especially for a smaller business. That’s where the use of technology can come in handy. Many new cloud based accountancy packages such as Xero have these sort of facilities automatically built in to help with these processes.
Click below to download a FREE debt collection reminder letter to use now:
It can sometimes be difficult for a business to chase a customer for money as they do not want to jeopardise a good working relationship. This is understandable but the customer should treat the offering of credit as a privilege and not a right and as long as any chasing is done in a polite and professional manner then there should be no problems.
Ultimately, after any accounts have been overdue for a period of time then the next stage would be to look at instructing a debt collection agency. The use of a collections agency can help get the matter resolved and also give a distance between the business and customer for any tricky conversations.
Again some of the sting can be taken out of any grievance about using a third party agency by managing the process. If you make the customer aware that the matter will be passed to a third party if the account has been overdue for an unacceptable period of time then you can hardly be criticised for taking such action and you should not be embarrassed to do so.
There are a number of reasons where employing the use of a professional debt collection agency can save you time and money. They can help to resolve any disputes in an amicable manner and also offer a more cost effective way to get accounts collected rather than issuing legal proceedings on a matter.
A good debt collection agency will also advise not only on the merits of a difficult case but can also give practical guidance as to the customer’s credit worthiness. A key element of debt collection that is often overlooked is that a matter will only be paid if the customer has the ability to pay. All too often, unwary businesses can take time consuming and expensive debt collection options only to find out further down the line there is no realistic prospect of success.
Using a collection agency with a track record in your particular sector will also usually mean they may have experience of the particular difficult paying customers before and know how to get those accounts collected.
The main advice we would give in relation to a collections matter is to always act quickly. Acting sooner rather than later can often mean the difference between getting the monies in or not being paid at all particularly if a customer is experiencing financial difficulty.
Not needing to worry about debt collection is the best remedy – proper credit checking, bookkeeping procedures, correct terms and constant communication are all part of the mix. BUT, a professional debt collection agency can add to this mix and support your cashflow when things go wrong.
Straight talking advice on Debt Collection procedures – Yorkshire Powerhouse
Now you’ve read our article on debt collection – have you any more questions?
Here at Yorkshire Powerhouse, we’re happy to help as much as possible – is there anything else we can do to help you, do you have any further questions or can we help introduce you to an expert – please let us know:
There are a few common issues in credit management. Knowing what these issues are can help to make sure you get paid in a timely fashion for your work. Read >