How to Collect Debt for Small Businesses in Australia
Effective Small Business Debt Collection Procedure
A good collection procedure ensures that by collecting debts owed to you, any sales made will add to the profitability of your small business. Without sound debt collection procedures, regardless of what the profitably was in the sale, unless you receive payment the job becomes nothing more than an expense.
Recovering bad debt is not always a quick process and unfortunately can cause crippling problems for small businesses. Slow payments create cash flow problems that can cost you, the business owner, time and money.
The importance of implementing and maintaining solid debt collection procedures for dealing with your delinquent accounts is crucial to your business to avoid bad debt. It should start from when the credit is provided, not once the goods are delivered. They should include ensuring the correct legal entity details of your prospective client are obtained before any credit is provided.
The Process of Collecting Debts
The small business debt collection process must include persistent and regular follow-ups that become progressively sterner depending on the age of the debt, nature of your business and the client you are dealing with.
Invoicing needs to be performed in a timely manner and should include your business’ payment terms. Structured and consistent invoicing habits are a must for any small business owner who wants to avoid bad debts.
As a business owner you need to remember that sales are only valued by the actual funds collected.
Collection of overdue accounts needs to be a daily task, not looked at just when cash flow is poor.
A good collections process will allow you to grow your business by ensuring your payments are received in a timely manner, whilst maintaining your client relationships.
Choosing a Debt Collector
Choosing a great debt collector is one of the most important decisions you can make for your business’ cash flow.
Pro-Collect Pty Ltd is a specialist Debt Collector whom collects debts on behalf of a number of small businesses across Australia. We have offices in Newcastle, Sydney, the Central Coast & Coffs Harbour. If you need help avoiding bad debts for your business, please don’t hesitate to call us.
Learn more about our collection agency services here.