Four helpful debt recovery tips

If you are one of the many SME owners who have extended credit to customers, chances are you have experienced the frustration of customers who don't pay. Acquiring new customers and growing your business is exciting, but there is no point doing it on the back of bad customers who won't pay.

Unfortunately it's not uncommon to acquire bad debt regardless of how thorough your market research is. Here are four helpful tips from SmartCompany that you can use to improve your debt recovery and reduce your chance of obtaining bad debt.

Train your customers and staff

It's essential that your customersare aware of the payment terms offered by your company. In order to achieve this you need to ensure that your invoices clearly state the payment terms and conditions, as well as the date payment is due.

In the instance where a customer does continuously fail to meet their obligations don't be afraid to stop providing your service to them. There is no point to a sale if it doesn't end in payment.

Train your staff

Make sure your sales team is completely aware of what the company payment policy is before making a sale. One way to encourage this learning is to ensure that staff is rewarded when payment of a sale is received rather than when the sale was made.

This increases their responsibility for bad debt and ensures they sell to customers who are better positioned to make payments. 

Be aware of your customers' payment cycles

Many customers have a set cycle of payment and will often pay their invoices on the same day of each month.

Understanding their payment cycle will help you identify payments that are likely to be late and also help you better manage your business cash flow as a result.

Always follow up

Most importantly you should never expect payment. Any invoice has the potential to turn into a bad debt depending on the circumstances of the customer so be sure to follow up all payments as soon as they become late.

Ultimately you don't want to sell your product or service for nothing so it's vital you do what you can to ensure you receive a prompt and full payment for what you are owed.

Need professional help? Dun & Bradstreet - debt recovery for SMEs

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