Getting Paid During Tough Times
With the economic downturn in full swing, small businesses are finding it hard to cope with unpaid invoices and overdue accounts. As a direct result, debt recovery is becoming a more and more frequent requirement and small businesses are feeling the pinch as they having to spend time chasing debt.
Overdue accounts can be a nightmare to manage for small businesses. If a business is dependent on a regular flow of cash then the problem is greater than those who have an extended period of payment in their terms and conditions. Ensuring the cash flow continues to come in means that these businesses are able to pay their own suppliers and avoid bad debts of their own, not to mention their staff who also need to be paid which is why outstanding debts can be such a problem. The recovery of the debt, however, needs to be done as quickly and as smoothly as possible so that the business feels as little of the pinch as possible. Ensuring that the company takes the right steps from the outset can have a better chance of you recovering the monies that are owed, as well as maintaining a healthy business relationship with customers.
When setting about to recover an outstanding debt, the first port of call is to ensure that the terms and conditions are clear, so the customer knows exactly what is expected regarding payment. It is a good idea to ensure that these terms are on all invoices and if you are going to use an external debt collection agency to recovery the debt, then it is advisable to mention as such in the terms also. That way there can be no doubt as to payment terms.
Once the monies become outstanding then the need to collect them back as quickly as possible becomes paramount. A cost effective and expedient debt collection company, such as Federal Management, are an ideal solution for this. For some businesses, however, there is always the worry that chasing the debt could cause a business relationship to turn sour, and to lose future business. As the payment terms near their end or shortly after, a “friendly” phone call can often result in payment. And if not, you have the option to follow this up in writing to instigate a gentle reminder of the outstanding payment due and, to re-emphasise your payment terms.
What is not recommended for a small business is to continually chase the debt via telephone or through the post. This means that the business is directing resources elsewhere and not focusing on making money. There are companies who perform these tasks as part of their service and are more likely to have a greater success rate anyway in recovering the money in this format. It also elminates the stresses that can occur with having to chase a debt.
A lot of companies will choose to utilise a debt collection agency to recover owed monies as they simply do not have the time or the know how to do it themselves. Whichever way a business chooses to operate it’s debt recovery methods, making sure that the money owed is recovered is the key to a continual cash flow and to getting paid in tough times.