Grab your money BACK

Unpaid debts can have a substantial impact on any business, no matter how small the debt may be.

Introducing an effective debt recovery system can ensure that you act quickly to deal with debt problems and help minimise the damage of not being paid on time.

It is important to cultivate and maintain good commercial relationships with customers. However, if they do not pay you for the work you have done, or are frequently late in making payments, this can have a substantial impact on your business. This may include reduced cash flow, as well as an increased likelihood of having to pay interest on an overdraft facility or having to offer discounts to customers in order to increase the likelihood of receiving invoice payments.

Cashflow and bad debts are stated to be two of the principal reasons why small business fail. This can be resolved by having a dedicated debt recovery system, or credit control team, to minimise the impact of outstanding debts. It is not always possible to have dedicated individuals to manage the debts, and this may necessitate managers having to undertake credit control and debt recovery themselves. Precious management time will therefore be wasted chasing customers.

Many individuals also find this task hard work, and some may be uncomfortable speaking with a long standing (or even any) customer about outstanding monies. This can often cause a delay in dealing with bad debts which in turn creates further problems for businesses. In particular, an ineffective debt recovery system can result in increased debts with a particular customer. This not only risks increasing debt and cashflow issues with your own business; it may also increase the risk of a customer failing, leaving you unable to recoup the outstanding monies.

If your business suffers with debt recovery issues, the ideal solution may be to employ an individual dedicated to recovery or credit control. However, due to the increase costs, this is not always possible. If you are unable to employ an individual in this capacity, it is important to manage payment from the very start of every business agreement. This involves building good, open and honest relationships with customers: a rapport which may assist when difficult topics need to be discussed.

The initial approach should not only be to build a rapport with the customer, but also to assess the risk to your business. In particular, should you consider giving credit to a customer, it will be important to assess the level of credit you will afford to them (including, but not limited to, the risk of the customer falling into arrears of pay and/or not paying the debt at all). There are various products which can give an overview of a company, and which assess its profitability and the risks of affording that company credit. These are not cheap however. The most cost efficient way may therefore be asking other companies who trade with the customer for references.