Debt recovery is sometimes necessary for businesses to recover the money they are owed. Indeed, a solid debt recovery strategy helps you stabilise your cash flow and receive money from your clients when you are duly owed it.
In terms of B2B transactions, there’s always a chance that certain clients won’t pay you what you’re owed. And so, it’s vital to implement a robust debt recovery strategy, even more so if you’re an SME.
Luckily for you, Cobra can help you put together, and even be a part of, your debt recovery strategy. Here’s how.
Present Your Payment Terms at the Start
Whether you have a separate department handling your payments or standard invoice terms, it’s vital that you make your clients aware of your payment protocol from the outset of yourselves doing business together.
This could include something as simple as explaining your payment policy as early as possible before your relationship develops, or something more detailed such as having qualified clients sign a payment policy agreement as part of their contract. In addition, you could even add legal text to your invoices that explains how you may go about recovering unpaid debts.
Whatever it may be, it’s important to get in front of any non-payment problems before they even develop.
Decide How to Deal with Consistent Payment Infringements and be Consistent
It’s inevitable that at least one of your clients may either pay late or try and withhold payment at some point within your relationship. On occasion, you may extend your payment terms to accommodate them, but always remember that individualised recovery solutions are out there.
Make sure to pursue every available angle before escalating the situation, be that sending emails or trying to reach your client via more traditional means of communication. Alternatively, if you have experienced consistent late payment from one specific client and have exhausted every possible avenue, it may be time to step up the recovery process.
Be Proactive about Payment
Rather than sit around just waiting to be paid, be as proactive as possible when it comes to payment. Why not get in contact with the client a week before the due date to discuss how things have been going, giving them a gentle reminder of your presence.
What we would also recommend doing – and this could even help us in the future should the situation escalate – is note down any payment promises your client may have made to you in the past, whilst also recording any excuses the client may have given you.
Indeed, while phone calls are much tougher to ignore, it’s important to send emails substantiating everything you’ve said as this can act as documented evidence.
Don’t Do It Yourself – Trust Cobra
Far too often, SMEs task themselves with doing everything, be it running the business or recovering debts – most likely at the expense of their more pressing tasks such as planning and building relationships.
While a good accountant can oversee invoicing and the payment process, if a problem should occur, it’s important not to waste your time and instead, instruct professionals to recover your debt.
Established over a decade ago, our specialist private debt recovery team are vastly experienced when it comes to handling any debts given to us by SMEs. So, if you need a debt recovering, and if you’re an SME, then instruct Cobra on 0151 526 4222.
You can also email firstname.lastname@example.org