Tips for a successful debt reduction strategy
1. Agree upfront upon
price
Agree upfront with the
debtor on the price being charged and have the job confirmed before you
commit your resources. If the account contains additional extras the
result will be a prolonged outstanding account and a debtor with
animosity.
2. Send your invoice
today
Send your invoices to
your clients on a daily basis. There is a direct correlation between the
time it takes to receive payment and the submission of an invoice. It
also reflects your seriousness about getting paid.
3. Be accurate and
concise
One of the favourite
excuses for not paying an invoice is that they never received a copy of
the invoice - yet they did receive the statement. Make sure that your
statements are detailed with the necessary dates, account/reference
number, amount and type of service delivered.
Ensure that payments
received are recorded. We often find accounts being handed over for
collection only to find that the account was already paid prior.
4. Check for credit
Ensure that you grant
credit to debtors that can afford to pay you. Rather spend money now and
do a reference check or credit bureau check than taking chances. We
often hear our clients reiterating that the debtor paid so well in the
beginning and then on requesting more credit the buck stopped.
5. Demand full detail
We find that most
clients do not have full detailed particulars about a particular debtor
except for a telephone number. This is not the right way of doing
business. If you want to pass credit you have the right to know with
whom you are dealing with. Draw up a full particulars form and get every
debtor to complete it in full. When in doubt about the information
follow up.
6. Surety
If you provide a
service/goods to a company, close corporation or organization, ensure
that you get a suretyship form signed. That should that company close
down that you can demand payment from the person who benefited from the
profits. It is a fact that debtors incur debt in the business name whilst
knowingly well the business is due to close down.
7. Latest technology
Find innovative ideas
how to make it easy for the debtor to pay you. Copnsider internet
transfers, direct bank deposits, collection service, cash on delivery
etc.
Ensure that your
accounting system is accurate and trustworthy. Do backups and keep on
par with the latest technology.
8. Discounted
statements
Offer your debtors
discount on their statement if paid within a few days but be strict and
exercise effective credit control.
9. Credit control
Don't allow your
clients to lobby your terms and conditions. Be strict. For example, if
you allow your clients to slip into the 60 days category you are
creating the impressions that you have poor credit control.
10. Contact the right
person
Identify who is the
person responsible for your account and make sure that the person
responsible is also the person collecting the service. Mark your
statement "private and confidential" if you deal with large
corporations to ensure that you get in line for payment first.
The more people
involved in this relationship the bigger the possibility of confusion.
Have you heard " will give him/her the message"?
11. Be persistent
By sending statements one after the other is an act of desperation. Rather send
one
letter demanding payment and be clear and concise, that is a sign of
determination.
12. Take action
Take action when your
client/debtor indicates that they are unable to pay your debt. Stop
credit. If you don't have the resources hand it to a debt collection
agency. Debtors pay the most demanding creditors first.
13. Practice policy
We all know how
important an ongoing relationship is between you and your clients as
your survival depends upon them. Advise your clients on your terms and
conditions, print it on all your statements and invoices and display it
on every possible manner for your clients to be reminded. You will go a
long way to build a sound, effective business relationship.
14. Training your
staff
Train your staff to
always overcome the objection of excuses made by the client not to pay.
It is important to always remove the negative element and try to be
pro-active in getting the debtor to pay.
15.
Signature
Get your clients to
sign every piece of paper available for them to sign on. And don't
forget the terms and conditions and suretyship form. |
