| 3 Top Debt Collection Techniques That Can Improve Cash Flow To Your Business |
 |
 |
 |
| Written by David P. Montana |
| Sunday, 10 May 2009 13:04 |
|
Effective debt collection techniques are a necessity for businesses in any economic climate. Knowing how to encourage your customers to pay their outstanding debts to you on time can increase your cash flow. After all, your business has its own debts to pay. Without adequate cash flow, you could be risking falling behind with your own bills, which could lead to problems with suppliers or loss of easy credit terms with your bank or lender.
Effective debt collection techniques are a necessity for businesses in any economic climate. Knowing how to encourage your customers to pay their outstanding debts to you on time can increase your cash flow. After all, your business has its own debts to pay. Without adequate cash flow, you could be risking falling behind with your own bills, which could lead to problems with suppliers or loss of easy credit terms with your bank or lender. Mastering these debt collection techniques often spells the difference between barely staying afloat, or thriving in your business. Here are the top 3 debt collection techniques to improve your business cash flow: 1. Alter Your Payment Terms Be sure you have clearly stated what your payment terms are on your invoices or on any quotes youve provided. Many business allow 30 days or 60 days until payment is due, but have you thought about reducing your payment terms to 14 days or 21 days? Amending your terms of payment can mean the possibility of receiving your money sooner rather than later. It can also mean that an unpaid account becomes delinquent within a month. You are within your rights to start collection activities before more precious time has passed. 2. Written Reminders & Follow Up Calls Once an account goes past due, you should send a reminder statement to the delinquent customer to encourage payment of the past due bill. Be careful in your letters, and use gentle language, as the laws governing debt collection techniques are quite specific. Also, by sending written correspondence means you have a record of your attempts at collecting the past due account, in case future issues arise. You should also call the customer to remind them of their outstanding debt, as well as establish a time frame when you should expect payment. Again, your choice of words and overall communication needs careful consideration, to avoid the appearance of harassment. Under the Fair Debt Collection Practices Act (FDCPA), debtors are afforded certain protections. Make sure you follow these laws and guidelines, whichever methods of contact you choose. 3. Outside Collection Agencies Sometimes it doesn't matter what you do, some of your debtors won't pay their debts. Even if they are going through some financial difficulties themselves, this still doesn't help your business if they've already received goods and/or services in good faith, and are no longer able to pay their bills. If youve exhausted all other avenues of debt collection options, then it may be time to call in a third party collection agency to pursue the outstanding balance on your behalf. Collection agencies are professionals in their field of expertise. This means theyre already well aware of the specific rules and regulations that surround the debt collection industry. They are able to act on your behalf to recover any delinquent payments owing to you and the debt collection techniques they use are specifically designed to bring cash flow into your business sooner rather than later. DISCLAIMER: This article is provided as information only and is not to be taken as financial advice. David Montana is a recognized expert, consultant and writer in the area of debt collection services. David wants to hear from you, and invites you to write about and tell us your success stories, as well as challenges, frustrations and issues with debt collection techniques. |