| Deciding when it is time to get serious about | | | | be applied to anyone providing services and can |
| recovering bad debts may be as simple as | | | | be a useful way to introduce a debt recovery |
| reviewing current procedures and systems | | | | agency if the customer defaults at any step. |
| for debt collection. There are proven strategies | | | | Maintain accurate records |
| to make the job less tedious and more efficient. | | | | Maintaining accurate records for all sales, services |
| Following these strategies will help you to make | | | | and related payments is imperative to getting |
| great strides in producing more positive results for | | | | your debts under control and actually preventing |
| controlling your bad debts and save you time as | | | | bad debts in the future. Therefore, in the event a |
| well. | | | | debtor disputes an amount owing, you will have |
| 1. Have a written policy on how to deal with bad | | | | accurate information to back up your claim for |
| debt Having a plan or policy about how best to | | | | the unpaid moneys. Document all dealings with the |
| deal with bad debt is an important aspect of debt | | | | customer |
| control and can be incorporated as part of the | | | | Documenting all phone calls, visits and |
| regular operations for the business. A written | | | | correspondence with the customer will be |
| policy could include step by step instructions | | | | invaluable if the account has to be settled in the |
| including – | | | | legal system further down the track. It also gives |
| | | | | you information at your finger tips when dealing |
| 2. - Setting a time limit on overdue accounts | | | | with the customer at any time. Hand the debt |
| 3. - Contacting the customer by phone | | | | over to a collection agency after a given time has |
| 4. - Sending reminder notices | | | | lapsed |
| 5. - Issuing a demand letter | | | | It is important not to let a bad debt accumulated |
| 6. - Hand the matter over to a collection agency | | | | over time as this can have a negative effect on |
| 7. Ensure customers understand the terms and | | | | your cash flow and business operations. Handing |
| conditions of the credit contract | | | | the debt over to a collection agency makes good |
| Before approving a credit account with any new | | | | sense if you have tried without success to clear |
| customer, make sure they have read and | | | | an old debt. Furthermore, debt collection agencies |
| understand your terms and conditions. If a credit | | | | are experts in recovery of overdue debt. They |
| agreement clearly states your expectations and is | | | | will give you the greatest chance of recovery and |
| executed by the customer, you have a better | | | | also allow you to spend time on what you do |
| chance of the customer honouring your terms | | | | best. |
| and paying on time. Request a deposit before | | | | Prevention |
| goods are received | | | | If you find yourself continually having to chase |
| For larger purchases and new customers that | | | | debt, it could be that you need to spend some |
| don't have a proven trade history, it is always a | | | | time improving your existing methods for account |
| safe option to request a deposit or part payment | | | | control. Preventing customer accounts from |
| for the goods before they take delivery. | | | | exceeding your trading terms could save you |
| Implement progress payments for services | | | | valuable time in the long term. Credit checks are |
| Some industries use progress payments as | | | | also a useful tool to help prevent debts. These |
| normal practice. A builder, for example, will | | | | can be performed by most mercantile debt |
| perform the work in stages and invoice at the | | | | collection agencies. |
| end of completed tasks. This same principle can | | | | |