There's no better feeling for a small business owner than finishing off a big job that had potential to overwhelm. Freeing yourself from the stress can be exciting, but it's important you don't get caught up in the feeling of relief and forget about the payment your owed. It's essential for your business health and cash flow that you have a timely turnaround on all accounts.
Below are five tips that can limit the possibility of acquiring bad debt:
Record customer details
It's important you have all the relevant customer details you need before you deliver a service or product. Not all late payments are due to bad debt, so it's a good idea to maintain the details of your customers to investigate the payment as it becomes overdue. Additionally, customer details are also perfect for initiating marketing strategy or activity, so it's a good idea to keep them on file.
Clearly state trading terms
As we mentioned, not all late payments will be a result of bad debt and sometimes customers will forget to pay due to poorly advised invoices. In order to help guarantee your payments it's essential you outline your company's credit policy, the due date and total amount owing on the invoice. By providing all these details you equip your customers with the information they need to make a prompt payment.
Offer early discounts
Sometimes customers will need an incentive to make early payment and it is common practice for debtors to ignore your invoice if they don't see it as a priority. One way to confirm the importance of your invoice to potential debtors is by offering a discount for early payments. Customers will always try to make savings wherever possible so even a minor discount of 5% is enough to confirm a prompt payment.
Keep in telephone contact
It's too easy for customers to ignore a letter or email that outlines the payment they owe. Telephone follow ups have a higher chance of success largely because it's a lot more difficult to ignore a phone call. Another major benefit of a telephone follow up is that you are guaranteed direct communication with your debtor if they answer, which can't be confirmed by email or letter.
Refer to a collection agency
Debt collection agencies are designed to collect payment for delinquent accounts so if you find yourself spending too much time on resources and still not getting anywhere it may be worthwhile outsourcing your debt. Agencies deal with debt collection everyday so it's only natural that they are better positioned to reclaim money you are owed.
Thinking about outsourcing your debt?