Running a business is deeply rewarding, but it can also be endlessly complex, with ongoing challenges and opportunities arising when you least expect them. One of the best parts about running a business is working with passionate and committed people who are keen to see your ideas come to fruition. One of the worst parts about running a business is dealing with cash flow and managing clients who don’t pay!
While it is deeply frustrating (to say the least) if you wind up in a credit relationship where you’re not being paid, it’s often just through a series of unfortunate events that you end up on the bad side of a creditor/debtor relationship. That said, there are things you can do to mitigate this bad business debt, and there are ways to manage your debts and clients to ensure that your cash flow is no longer an issue.
We want to go through some of the ways that bad debt happens and then discuss some of the ways in which it’s possible to get out of this cycle.
Need assistance with unpaid debts? Strathmores are here to make short work of debts with our debt collection services. No fuss, and plenty of opportunity to preserve your business relationships – find out more by calling us today on 1300 347 929.
How Does Bad Business Debt Happen?
Usually very slowly. Unfortunately, it’s often the case that bad habits sneak in with your customers; you might allow a later payment on one invoice of a couple of days, and then over time, the customer will push the envelope and end up in arrears of a few weeks or even months. While they do pay eventually this kind of heel-dragging is just terrible for your forecasting and your cash flow.
You need to address a few key things within your business in order to ensure that you don’t get into bad business debt in the first place. Here are some of our top ideas for your business:
- Make sure that payment terms are incredibly clear and are built into every invoice that you send out.
- When new customers or clients come on board, include a short on-boarding meeting where you discuss payment terms and go through all of the options that your customers have for payment, including payment plans if applicable.
- Consider switching to a retainer-based model where customers pay an upfront fee.
- Offer incentives for clients paying early. You know how your power company gives you 15% off if you pay early? This is a carrot to get your dollars in their account sooner! Consider offering something similar to your clients with the understanding that money in your account is worth more than the additional 15% of the invoice.
- Follow up often and be gentle but firm! Often other business owners are busy and forget to pay invoices – it happens. This is where a gentle reminder can help. Depending on your invoicing system you should be able to automate this task which ceases upon payment.
Of course, while it’s great to take steps to prevent payments being an issue, there will sometimes be situations where you just can’t help the fact that customers don’t pay. In this case, it’s helpful for your sanity (and the preservation of your customer relationships) to work with a professional organisation.
This is where a company like Strathmores can help you, because not only does it take any personal feelings out of the situation, but you will also be working with experienced debt collection professionals. This means that we can operate swiftly and effectively to mitigate unpaid bills and deal with debtors on your behalf.
Advantages to Working With a Debt Collection Agency
When you work with a debt collection agency, you reap the benefits of professional experience. Along with that, there’s also:
- Legal protection
- Successful debt collection in short time frames
- Reputation management and client relationship management
- Save time and resources within your business
One of the biggest killers of business is cash-flow, and this can be caused by debts mounting. Don’t let this happen to you – work with Strathmores today and get your debts on track.
Call us on 1300 347 929 for a confidential discussion about your debts and how we can help.