Customers who cause large business debt are a threat to any business but sadly outstanding payments have become part of the business landscape. Such accounts receivables can seriously harm a business and prevent it from prospering and in the end maybe even operating. Collecting a large business debt can be a daunting task especially for small companies. But a loss of resources will affect cash flow, hence it is important to retrieve the money as soon as possible as the larger the debt, the more it will be necessary to collect it. The reasons why clients and customers become delinquent in their accounts can be several. Whether a customer fails to pay because they are waiting for a payment themselves, have lost an order, experience poor financial management or they simply chose to pay another creditor first, in all of those cases your business is prevented from getting revenue.
Debt collection can turn into a lengthy process when the debtor is failing to communicate or information outdated. To help you collect your receivables as soon as possible, we have put together some tips and strategies for increasing your revenue and stay strong on the market continuously.
Make a friendly call
Experience shows that the older a debt becomes, the harder it is to collect. To collect the debt in full and as soon as possible, once a payment is past the due date it is inevitable to give the delinquent customer a call as a friendly reminder. Be prepared before you make initial contact with the debtor and look through all invoices and contracts to not only make sure the debt has in fact not been paid, but also to be able to speak knowledgeably and professional with the debtor.
Send reminder emails and letters
Such letters should furthermore include all the information that was discussed on the phone earlier and may serve as evidence later in case you need to take legal action against the customer. You could also repeat the discussed payment plan and point out that you do not wish to get a debt collection service involved for settlement. Always end the email with a sentence that refers to the next due date and indicates what your next action will be.
If the debtor’s excuse for not paying is legitimate, be open to the idea of working out an installment plan if this seems appropriate. It is important that the plan works for both of you, as the goal is to get the debtor to pay the entire amount as quickly as possible. But even if the delinquent debtor cannot pay straight away, it is always important to keep the communication going as sometimes circumstances change and payment may become possible.
Use a mediation service
If you cannot get to terms with the customer yourself, consider using a mediation service. Such services can be an inexpensive and effective solution to recover large business debt as the mediators often have debt collection experience or are able to recommend a collection agency in your area.
Hire a debt collection agency
In case none of the above collection techniques has worked, consult a collection service and turn the collection effort over to professionals. For this step, it is important to have documented all your previous collection efforts and organized up-to-date for the professional to take a look at your case.
Especially in difficult economic times, large business debts are common. By using the above collection techniques your success of retrieving accounts receivables should increase. But a lot of Australian businesses have turned to debt collection agencies and let those experts take care of their accounts receivables to save on time and human resources.