Managing outstanding debts is challenging for a lot of businesses in the UK. Not only do late payments have a significant impact on cash flow and day-to-day business operations, but chasing debts can be time consuming and stressful. To simplify things, businesses need to have effective debt recovery strategies in place.
Debt Recovery Steps Every Business Should Be Taking
- Have a Clear Credit Policy in Place – One of the most important things to do when you’re trying to recover debts as a business is to put a clear credit policy in place. This will act as the basis for all of your debt collection efforts. Your credit policy should include the terms and conditions of payment, such as due dates, interest on late payments and penalties for a payment not being made. This ensures customers know when payments are expected, which can reduce the chances of them turning into a debtor.
- Monitor Accounts Receivable – Keeping on top of accounts receivable will help you to identify overdue accounts as soon as possible, enabling you to take action quickly and before the debt spirals. It’s a good idea to conduct weekly or monthly reviews, and take note of any outstanding invoices. From there, you can prioritise which accounts and payments to chase first.
- Regularly Communicate with Debtors – It’s important to communicate regularly with customers, starting the moment a payment becomes overdue. This can be done via telephone calls, emails and letters, or a combination of all three. Effectively communicating with customers not only reminds them that a payment needs to be made, but it will encourage them to work with you to find a resolution or payment plan as soon as possible.
- Be Flexible with Payment Options – No two debtors are alike, so try to be flexible with the payment options that you offer. This means being open to letting debtors pay in instalments that are easier to manage, accepting various payment methods including online payments, and offering discounts for early settlements. Being flexible shows that you are willing to work with customers, which increases the chances of them repaying the debt.
- Don’t Be Afraid to Escalate – There’s only so much that can be done as a business trying to recover debts, and eventually you might need to escalate things. If a debt remains unpaid, consider sending a final demand letter and outline the consequences of non-payment. This is sometimes enough to encourage them to make a payment. If the debtor continues to avoid payment, enlist the team of a debt recovery agency.
Professional Debt Recovery for Businesses
At Cobra Financial, we work with businesses large and small to recover debts. Being owed money can be a huge inconvenience – not to mention the impact it has on cash flow – and chasing payments can take up a lot of your time. By enlisting a professional debt collection agency, you can focus on your growing business, knowing that a team of debt recovery experts is handling everything. Get in touch with our debt collection experts to find out more.
