Possibly the most difficult area of any business is getting customers to pay on time. Or pay up at all. There are always problem people who either assume that if they leave a debt long enough it will go away – or those who would pay but find themselves in awkward financial situations of their own.
But because it’s difficult, many businesses may leave debts to linger far too long before they approach a professional debt collections agency. Finding and pressing defaulters for payment can be stressful. There is always the desire to protect customer relationships, but still a need to be paid on time.
In general though, for every month you delay you lose another 10% of recovery potential. It just gets harder and harder. So making that handover decision timeously is actually a cost-efficient choice. Cash is cash and money owed must be collected because otherwise your business is suffering.
Here are the warning signs that it is time to bring in a debt collector:
Breaking a first promise to pay
Broken promises are always a sign that trouble is on the way. So don’t give your customer another chance. Because if they do it once, they are very likely to do it again.
Avoiding contact attempts
There is no point in continually sending communications to a customer who makes no reply. They are not entitled to simply ignore you. This is the time to bring in the heavy guns and outsource to a debt collector who will know the procedure to follow and give you the backing you will need.
Ignoring demand letters
These are serious demands to pay that if ignored mean you will definitely need the strong arm of a professional debt collector who has the authority and knowledge to take the case all the way to the courts. The debtor will know this, and should be motivated to respond.
Breaking the terms of the original agreement
Any customer who assumes they can do this and get away with it, is sorely mistaken. It’s time to send a strong message to your customer – and the best way to do that is to simply hand the problem over to a professional debt collection agency. They are more than adept and trained in handling contractual disputes on your behalf.
Making partial payments to buy more time
Unless you have agreed to this, you should outsource the debt because this situation will doubtless become tedious and nitpicky. Debt collectors have automated systems to handle instalments and are much better positioned to handle this type of negotiation.
Refusing to pay because of a dispute over a product or service
An experienced debt collector will ensure they understand your product/services, as well as your terms of agreement and conditions, so that they are able to negotiate any disputes or disagreements on your behalf.
No one has the time to follow up on outstanding invoices
It’s good idea to have a reliable debt collector on your side from day one. This alleviates a host of headaches – and leaves you free to do what you do best, which is servicing your good customers and keeping them happy.
- Cash flow is the very lifeblood of a business. Collecting debt problems instead of cash makes no sense.
- Without effective credit control systems in place, your business runs the risk of having to juggle finances to meet your own payment deadlines, or resorting to other avenues of finance to facilitate cash flow, all of which results in your business incurring further expenses.
- It makes sense to evaluate time and cost savings against the cost of outsourcing your debtors book. Time is valuable and can be used to focus on your core business and generate more revenue for your business.
- Debt Collection agencies can operate as either a third party or as your company’s credit control department, seamlessly becoming an extension of your business – handling all calls, emails and documentation in your company’s name.
- Outsourcing your debtor problems means that persistent debtors will be timeously identified and specific strategies devised according the individual circumstances of each debt. A good agency should tailor procedures to the profile of each business and each individual debtor, giving you back control of your business and a good basis to build a trusting relationship with your customers.
For a full outsourced service of your accounting system, plus debt management, you can find agencies that include: a credit control solution tailored to your company’s needs; setting up accounts, raising invoices, sending out monthly statements, reconciling accounts and reporting; and handling all legal documentation and approach when required.
LegalTrack – how we do things differently
At LegalTrack we work with real people with real problems and therefore we apply a highly considerate and respectful approach to debt collecting. We understand that we need to be firm, but we are also aware that to negotiate successfully with an individual who is already in a difficult financial position, we need the skilful combination of empathy and experience, backed by well-honed communication capabilities. Our modus operandi is simple, direct, efficient:
- Our first contact is via an SMS.
- This is followed by a phone call to begin the negotiations on how the debt will be paid.
- All payment arrangements/negotiations are confirmed via letters, emails and text messages.
- Our promise is to constantly keep contact with our debtors in terms of all arrangements.
- Any legal action is considered the last option.
Please find out more at: www.legaltrack.co.za