Tips for a successful debt reduction strategy

Make the following business practices standard operating procedure in your business and you will be surprised at how much better you can manage, prevent and recover bad debt.

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 to hand-over.

4. Do credit background checks

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 - know your client

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 grant 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. Then should that company close down, 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 knowing full 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.

Able Tracers & Debt Collectors

Able Tracers & Debt Collectors are experienced Debt Collectors and are here to assist you to get the money owed to you.

If you have trouble collecting debts from your customers, then contact us.

Comments are closed for this post, but if you have spotted an error or have additional info that you think should be in this post, feel free to contact us.


Get the latest updates in your email box automatically.