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Category : Debt Collection Tips

Risk Management

Debt Prevention is the Best Cure

                                     Debt Prevention is the Best Cure

We live in a golden age of access to information, thanks to the internet you can find pretty-much anything you want to know using your computer, tablet, or smart phone. What’s really nice is the ability to find people that can help you achieve your goal.

Equipped with the answers to your debt problem, what does the average manager / owners do with the information?

In most cases they do the same as they did last month, last year and the year before that, hope the customer pops in and pays.

It happens because the average manager / owner believe the following reasons are somehow valid when it comes to collecting what’s owed to them.

  1. They seem nice, they will pay eventually
  2. I haven’t got time to chase customers, I’m too busy
  3. We don’t want to upset the customer
  4. They may move to another practice
  5. We phoned and sent letters, what more can we do?

The excuses detailed above are by no means complete, managers and owners tell themselves that engaging the services of a collection professional is too risky, too expensive, too time consuming and most of all to its uncomfortable to deal with. Somehow it seems easier to ask the bank to increase facilities rather than collect what’s owed to them.

What Can I Do? Answer – Introduce clear guidelines

One of your first jobs as a business owner should be to set in place a set of clear guidelines for the issue and recovery of invoices. All customers and staff should be made aware of the process of issuing and chasing invoices and this should be adhered to consistently – without fail. Don’t give second, third or fourth chances to customers – they’ll come to expect it and could end up taking advantage.

Writing your guidelines

When thinking about these rules, think carefully about your particular business. If you run a veterinary practice, for instance, you will have a number of different income streams – those who are regular customers, those who are emergencies and those who are ‘commercial’. As each type of customer arrives with entirely different sets of circumstances, each of these may be dealt with differently.

 Get your procedures right from the outset.

An example of your guidelines could be:

Emergency customers must pay in advance / at the time of treatment
• Regular on-going treatment may be completed under payment/credit terms
• All credit customers must undergo credit checks first
• All invoices must be paid within one month
• One reminder will be sent before further action is sought

Use a good T&C specialist solicitor

You should set up your terms and conditions with a specialist to ensure that they meet all the correct legal requirements. We are lucky to work with a firm who we recommend to our clients to ensure that your procedures are watertight – preventing any confusion or issues in the future. Contact dsl for further details. www.dsluk.net

Make everyone accountable

Charge one staff member with the job of looking after accounts and invoices. Having a clear person who can be the point of contact for all clients and customers is vital for giving your accounts department a “human face”. This makes it harder for there to be instances of any miscommunication or misunderstandings – as there is one person who has dealt with the entire procedure.
The ‘right’ person should be friendly and understanding, but also willing to be hard when called on to do so. If problems arise internally and you’ve followed your own procedures, there should be no issue with passing on debt to a collection agency – after all your customers know what is expected of them from the outset.

As you can see, the point we are trying to make is that everything should be laid out; clear for all to see and that it works for your business type. Hopefully this should mean fewer instances of unpaid bills.

Should you want to find out more about correct procedures or, to find out more on how we can help you, please feel free to contact us on 01527 543672 or via email mike.brooks@desluk.net

 

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Dealing with Business Debt Series – Part 3 – Action

Dealing with Debt Series – Part Three: Action

As a business owner, the first time a customer fails to pay and you realise you need to take action, it is a scary and worrying time. But it needn’t be. Hopefully you have already put in place the right procedures and communicated these to your customer. Now all you need to do is follow through on those steps.

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Reasons why you may have to take action on debt

This is pretty simple – your customer has failed to adhere to the rules you have in place for payment of your invoice or terms of credit. This may mean they have missed one or more regular payments, they have ignored your invoice or they have called to tell you that they cannot pay.

What to do next

Just follow the procedures you have in place, depending on the type of debt that now exists. Your action could take the following approach:

        A phone call to the customer to remind them of payment after a set time has passed. Try to take payment over the phone if possible.

Keep it informal at this stage.

        A strongly worded letter reminding them of your rules and the consequences of not paying. This should include all details of the debt, when it was due and a reminder that they have been contacted previously.

Make sure they know how much to pay and when.

      This action could include passing the debt to a collection agency or getting a solicitor involved.
      You can make a claim via the County Court Money Online service, this option should be your last resort as the consquences can be servre and have a long lasting effoct effect on your customer,see my blog, 6 ways the court can help collect money owed to you.

If your customer has called to tell you they cannot pay, they should be placed on a different ‘pathway’ that may include different payment terms over a longer period of time, it’s your choice.

Avoiding future action

As soon as your customer is late with payment, you need to decide how you will deal with the customer in the future. A late payment may simply mean no credit terms or payment upon completeion of service.

Failure to pay could, quite justifiably, mean that you insist on payment before any additional service is offered. Or perhaps you will decide never to deal with the customer again. This is very much situation dependent, however, with the right approach, taking action on money owed early can lead to improved cash flow and repeat business. Whatever you do, if you follow the steps we’ve outlined throughout this series at least you know you have done the right thing at every stage – because you were prepared.

Should you want to find out more about correct procedures or, to find out more on how we can help, please feel free to contact us.

Kind Regards,

Mike Brooks

Director at Debt Solve UK Ltd T/A as DSL.

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Terms and Conditions – How Important Are They?

Reading Time: 30 Seconds

An up to date set of Terms and Conditions for the Supply of Goods and Services Including Retention of Title are a must in today’s difficult environment.

It’s not enough to have Terms and Conditions printed on your invoices, good practice requires a specific Terms and Condition document which should be issued to each customer prior to goods or services being provided, it will help to safeguard the seller or service provider should payment fail to be made.

As the number of businesses using our service grows ever larger we are able to refer Debt Solve customers to our company lawyer who can offer help and guidance and assist you in the implementation of quality Terms and Conditions applicable to your business at a preferential price.

Don’t get bogged down in legal mumbo jumbo, let the experts do the work while you get on with running your business with the satisfaction of knowing you are protected the best that you can be.

The moral of this story:

Get Protection, You Know It Makes Sense.

Photo Credit Dirk Heuer

Debt Recovery Tip #1:How do I collect what’s owed to me quickly?

Reading Time: 55 Seconds

There’s this Guy – he owes you £1,000.  He also owes someone else £1,000.

There’s good news though, the £1,000 is paid in full.  Quite quickly and cheaply.

Unfortunately, we’re talking about the other debt being settled – not yours.  And now yours is even harder to recover because he’s just spent all of his money!

There’s a saying in the debt recovery business…

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