7 Aspects of a Successful Debt Collection Process in 2020
Every business, big or small, needs its cash flow to be in tiptop shape if it has any growth ambitions. A significant part of that cash flow strategy should be a debt collection process. A successful process is vital for the recovery of bad debt. Although, his can be a touchy subject for both creditor and debtor, and one that causes many business relationships to become strained.
Striking a balance between maintaining a positive business exchange and recovering your dues promptly is what the business debt collection process is all about. That’s why there are certain debt collection guidelines in place, aimed at ironing out any issues for all those involved.
How debt collection works within a business environment is a product of many different factors that pertain to the business in question, but we find there are 7 aspects that apply to all companies, and we’d like to share these with you:
1. Use a Dedicated Account Manager
Dedicated account managers are trained to handle every account and every step in the debt recovery, from Letter of Demand all the way through to the legal process. They can be in-house or independent account managers, and their blood is worth bottling, by all accounts. That’s because they can offer you peace of mind and reassurance that the collection or litigation process is running smoothly, and that the time and resources you put into your claims are minimized.
2. Be Assertive
Taking action in an assertive and timely fashion is key to streamlining the business debt collection process. Actioning accounts if and when due is a matter that requires preliminary planning. The action plan should clarify not only the urgency, the difficulty, the priority and the ideal timing for setting the wheels in motion and carrying out each step on the knocker, but also establishing your plan B after every milestone is reached.
3. Come At The Problem From Multiple Angles
Don’t put all your eggs in one basket. Keep your options open, and make ample use of all the legal alternatives available, instead of opting for one at a time. Don’t be afraid to rely on specialized services to locate your debtor or any assets you believe may be kept from plain view, so that you have something to fall back on in case the debtor refuses to co-operate.
4. Think Outside the Box
Have your attorneys and negotiators liaise with others across Australia, have several arrangements in place, and be open to more creative means of recovering your dues than the standard ones, including stock transfers or accelerated payments.
5. Negotiate Fairly
Whatever the bone of contention, remember that most business owners do not intentionally set out not to honor their debts, and that you may still wish to collaborate with your debtor in the future. Find your common ground, and try to bring your debtors into terms in a professional, firm yet respectful way. Offer the option of a lump-sum payment in return for a more lenient approach to late fees, set out your terms clearly, and stick to them religiously once an agreement has been reached.
6. Communicate Clearly
Whatever the bone of contention, remember that most business owners do not intentionally set out not to honor their debts, and that you may still wish to collaborate with your debtor in the future. Find your common ground, and try to bring your debtors into terms in a professional, firm yet respectful way. Account managers will be equipped to handle consultation and communication between both clients and debtors efficiently.
As soon as you see any majors issues, like payment going beyond 90 to 120 days, make sure you act accordingly, be sure to follow through and to leave no loose ends. With all the work you’ve put into the business debt collection process, the last thing you need is to writing off debt by not having an action plan such as referring the debt to a Debt Collection agency for their expertise and urgent attention.