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5 Ways to Improve Your Business’s Debt Recovery Process and Avoid the Debt Chase

5 Ways to Improve Your Business’s Debt Recovery Process and Avoid the Debt Chase

If you’re in business, we’re making a bet that you’ve probably experienced the runaround that takes place when you’re chasing up a debt. It’s not pleasant, but it’s something that every business owner has to face at some point.

Whether you’ve been chasing the same debt for a couple of months and are reaching the point of utter frustration, or if this is your first foray into debt collection and you’re wondering about the best way to proceed, we empathise.

If the statistics are to be believed, the small-medium Aussie business is owed on average of $13,200. Yikes. We don’t want you to even scratch a fraction of that amount owed to your business, so we have put together a helpful list of ways to avoid the debt chase altogether.

#1: Get a debt collections agency on side

Ok, so we’re blowing our own trumpet here, but we have a good reason to do so! Often debt collection can be a difficult and drawn out process, and many businesses experience the breakdown of what was previously a good working relationship due to money complications. As a result, that once good relationship is now ruined and there’s bad blood.

Well, when you work with a debt collections agency, there’s every chance that you won’t even get to the relationship breakdown stage – but if things do get difficult, we’re experts at preserving the relationship and making sure things stay kosher.

#2: Screen customers carefully

One of the easiest ways that you can avoid the problems faced when chasing debt is to not get involved with suppliers or businesses who are going to be trouble in the first place.

When you’re engaging in B2B transactions, we strongly urge every business to undertake a company search on the ASIC website and take a good look online to see if you can find any information about the company. If you find anything worth flagging, be sure to ask your potential new business contact about it, and if they’re genuine and worth working with, they’ll be able to explain or discuss the issue at hand.

#3: Offer incentives to your customers for early payment

Often customers won’t want to miss a payment deadline, but things just get in the way and payments fall behind. If you want to turn all of your customers into people who pay on time, then offer them a small discount or incentive to make their payment by the deadline. Power companies do this all the time – and you’ll make the payment before the due date just to save that extra couple of bucks.

Make sure you also think about incentivising early payments, whether that’s with something like a discount, access to a new product, or an extra product or service as a benefit for your prompt customers.

#4: Don’t be afraid to reach out to your customers

There is a lot to be said for the internet and what it has done for our ability to reach out to our customers online. That said, while it’s vastly simple to send an email, it’s important to actually take the time to talk to your customers too. You see, when you reach out to your customers and actually make a phone call to them – or even better, visit them in person – you’ll foster the relationship and essentially build that person-to-person contact.

When you know a customer/business owner personally, it makes it that much harder for them to be late on a payment! If you only know someone via the internet or emails, it’s easier to pretend they’re not a real person.

#5: Make it easy for customers to contact you and understand their debt

When you’re engaging in transactions with your customers, it’s important that you set explicit limits and deadlines for payment. You need to be very specific about what you want people to do, and when you want them to do it. Cloud invoicing software can help here, as can having a company like us on your side who can provide advice and guidance on managing your invoices and debtors.

And while we’ve given you these five tips, here’s another one for free: Make sure you’re always professional, polite and give people options whenever you can.

While it’s hugely frustrating being owed money, that should never stand in the way of you being polite and professional with your debtors. Offering people options is also a great way to make sure that you’re going to get paid – even if things do take some time to process. You should only ever turn to legal action as a very last resort, and don’t ever be afraid to say no to someone or to impose particular conditions like requesting 50% upfront payment, or something like that.

If you’re struggling with debt and need to clear the road ahead, be sure to call us at Strathmores. We are experts in managing debt and can help your business get back on track. Call us today on 1300 347 929.

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