Every business owner has to factor in dealing with bad debt from time to time. It is an an inevitable part of running a business. No matter what industry you operate in, how many years you have been in business or how you operate your business, all businesses will have clients that pay late or try to not pay at all. How proactive you are in responding to this can determine the cash flow of your business. Companies that have poor systems and processes around Debt Collection struggle to tackle this issue and it can be detrimental to your success as a business. We are all in business to make a living. Getting paid is important. Some would say it is the most important aspect of running a business. I would Agree.
Previously we discussed very helpful ways to resolve inhouse issues with 5 quick tips to improve Debt Collection inhouse. Today we will discuss 4 ways to shore up your processes and list 4 excellent ways to improve how your business deals with bad debt.
1. Have the Right Frame of Mind
Many businesses come to us under severe financial stress. They have left it too late and cash flow is a massive issue. Bad habits in Debt Collection leads to bad cash flow. Dealing with bad debtors is not complex and not hard. It is just about getting it done. Set a day once a week/fortnight/month and call/email your debtors. Remind them you are due to get paid. You are not a bank. Action negates stress.
2. Reduce your Financial Liabilities
If this is still not working, seek help. You can engage Taylor Ryan on a no win no fee basis and we will start getting your Invoices paid quickly. We will formulate the best plan of action to get your debts paid, take the pressure off you and get your business cash flow positive.
We all run businesses to become positive. If Clients are consistenly paying late, suspend services. Tell them you will not act for them. No business should have to work if they are not being paid. Some clients are just not worth the hassle.
3. Shore up Processes/Systems
If you find you are being exploited constantly and bad debtors are frequent, do a complete overhaul of your debt collection processes and systems. You are entitled by law to ask for your Invoices to be paid via Letters/Emails/Calls/Texts. Check your right here on the Mabs website. Try and find the root cause of why you keep getting into this position
- Are you getting Invoices out on time?
- Do you have up to date contact information for your clients?
- Do you have the correct entity on your Invoices?
- Is the debtor still trading?
- Reasons for no payment. Is there similar common disputes?
- How long is the debt overdue?
- Are we waiting too long to call the debtor?
4. Don’t take too long to reach out
The worst thing you can do with a debt is nothing. Take too long and the business may have closed and your window of opportunity has passed. Get on top of your debt and seek assistance if necessary.
If you need help with Debt and Money Management, please see MABS website. MABS is free, confidential and independent.
If you want an obligation free chat about helping your Debt Collection processes, feel free to contact us on 085-1875571.