How To Ensure You Minimise Overdue Trade Accounts
How To Ensure You Minimise Overdue Trade Accounts
Your business has created an excellent payment terms system. Your credit control process staff are experienced, and your accounts and invoicing processes are being followed to a tee.
However, you’re noticing that your trade accounts are not paying despite all of these methods. What can be done, and where does the problem lie?
This situation is common for many businesses all across the UK. Despite the best intentions, and even though you have put all the effort in, your clients will still find a way to withhold payments.
When facing overdue trading accounts, most businesses will perform one of several actions:
- Continue to chase for payment
- Keep the account open, but pause the product or service until payment is made
- Write off the debt
- Hire a professional debt collection agency
Continuing to chase for payment might seem like a good option, but it will often prove to be unsuccessful. Many debtors who are set on not paying will completely ignore any chasing you might do. Continuing to do so would only waste valuable time and money.
Keeping the account open but suspending goods or services can be a good way to reduce any further losses but does not recover the money you have already lost. In most cases, a debtor will not pay just because you have stopped your service but may seek to resume them with a second (often false) account.
Likewise, writing off overdue accounts is also inadvisable. Whilst it may be tempting to “draw a line” and strike off an account when you are yet to receive payment, there is usually always a solution. Writing the debt off virtually guarantees you will lose the money that you are owed.
When you are owed money from an overdue trade account, the best step to take is to involve a third party.
Preventing Overdue Payments and Aiding Cash Flow
Most businesses will take certain steps to avoid accruing a portfolio of debts.
For example, many will provide incentives for clients to pay on time. This may be in the form of a charge being applied to all invoices that miss their due dates. If an invoice that needs to be paid within 30 days is not actually paid until 60 days after its due date, this charge could be applied.
In other cases, some companies offer a slight discount on their total invoice amount if it is paid in advance.
Most businesses have comprehensive terms and conditions when it comes to payment. It is important to set up these if you do not already have them. You should also educate your clients with regards to their obligations before asking them to agree.
Although it does take more time and money to implement these steps, it is more beneficial overall Taking these steps in advance can help to save thousands that may overwise have been written off.
Recovering Money Owed from Overdue Trade Accounts
Are accounts regularly missing their payment date? If your business is struggling to collect overdue trade accounts, involving a third party to recover a bad debt is a sensible decision.
Whilst a cost will be incurred, it will be dramatically lower than what it would cost to either write off the debt or recover it alone. As well as this, your staff, who would otherwise be tasked with chasing a trade account for payment, would be able to concentrate on more valuable tasks.
A professional debt collection service provides the best solution, and Federal Management is known as the UK’s leader for commercial collections.
How To Ensure You Minimise Overdue Trade Accounts – Frequently Asked Questions
Can overdue trade accounts be recovered from a client in another country?
Yes, if your client is based in another country, you will probably be able to recover the debt. Federal Management offers an international debt collection service that can recover owed money from anywhere in the world. Speak to us today for more information.
Should I write off an overdue trade account?
No, you should always consider a professional solution before writing off an account. It may seem justifiable, especially if your business has already spent time and money chasing the debt, but a professional solution can usually help you recover your money.
What is the cost of debt enforcement?
This depends on the exact nature of the debt you need to recover. Much like other service-based solutions, an expert debt collector would need to investigate your case before being able to provide a cost.
What type of business can use a debt collection agency?
Any business can benefit from the solutions provided by a professional debt collection agency. Federal Management has recovered millions of pounds worth of debt for business in every single working sector. Speak to us today for information on how we can help you.
What can I do to prevent an overdue trade account?
Many businesses set up payment terms or implement overdue charges on their invoices. These can be effective, but a debtor who is determined may attempt to withhold payment. If this happens, speak with a Federal Management debt collection expert right away.