In our last blog, we have already outlined a procedure on how companies can guard themselves against bad debts by introducing a Credit and Application Form and Terms and Conditions that should be submitted and filled out by any potential customer.
One of the most crucial parts of controlling the credit is that the terms of trade agreed to by the new client through signing the form, must be adhered to once the customer has been evaluated and services performed. To make sure the new customer recognises the payment commitments he/she agreed to, it is essential that the collection effort is tightly claimed. For keeping a sustainable business relationship in the future it is significant that there are set boundaries on due dates and no extended terms given, not only to protect your own business from possible fatal damage but to set the framework for the new collaboration and its collection procedure.
Given all this, it is crucial to set the right date for the first deadline, such as to make sure the new client does not get the impression of free play allowance in terms or you might end up forever collecting a debt from this specific customer. Nevertheless, a new customer will always welcome a civil reminder on the due date before any further approach should be considered.
Once the client has fallen back in payment, the next step taken could be receivable report letters written on a weekly basis. Their wording might intensify over time to stress the degree of urgency and to keep the pressure on the credit department.
A lot of companies set up a phone call after around 14 days past the due date in order to encourage the client to settle the payments and remind them of the terms of trade. The right point in time for such verbal reminder may have been previously appointed and confirmed in the Terms and Condition.
After having undertaken all these steps and the account still being over terms of 30 days, it might be time to take a different action and move on to the next phase. To save your business from significant damage through bad debts you should consider getting external assistance through a collection agency. In selecting the right agency, it is vital to make sure to find one that absolutely understands your business and knows how to work hand in hand with your own credit department.
Having undergone this series of procedures to prevent the crushing experience of bad debts, it is almost certain that your business can keep making a solid profit rather than facing outstanding cash that is still needing to be claimed.
If you would like to learn more about the debt collection services we offer, contact us now. We have over 30 years of experience providing professional and discreet debt collection solutions for clients of all sizes and across all industries. Our debt collection services are available in Sydney, Melbourne and Brisbane.