Debt Recovery seems to be a new phrase that I am hearing everywhere these days.
When economic times are good most business owners don\'t worry unduly about money owing and tend to let outstanding debts pass without too much concern because money is always flowing into the cash register and sales are the thing to concentrate on. Now that the economic climate has changed many businesses are starting to discover the importance of a healthy cash flow and are now realising what a drain bad debts can be on the business.
For many business owners this is the first time they have faced a recession, or a business downturn, and the world of debt collection and debt recovery is unknown territory for them. Many don\'t know where to start, when to call in a debt collection firm, or even what their legal standing is regarding debt recovery.
The first thing that most people discover is that they don\'t like debt recovery, they don\'t like making THE phone call to a customer with an outstanding debt, and they definitely don\'t like hearing all the excuses as to why they are not going to be paid in the near future. Most businesses have very little success with handling their own debt recovery, mainly because of the length of time they take to start trying to collect an outstanding debt and also because of the methods they use.
Research has shown that the success in collecting a debt is proportional to the time taken to initiate debt recovery measures. This means that the longer you put off trying to collect a debt, the less likely you are of succeeding. This is particularly true at the moment when the number of businesses failing is at an all time high.
Think of it this way. When your customer purchased a product of you, he had every intention of paying the account but between the purchase time and payment time his ability to pay has decreased for some reason. His payment ability will most likely continue to decline so your chance of getting paid next month is less than it is this month.
The second thing to consider is your debt recovery methods. No one likes to be the "bad guy" but it is your money and you need it to keep your own business afloat, a friendly phone call just doesn\'t produce results. The old adage about the squeaking hinge getting the most oil is very true in this case. Your customer is likely to have the ability to pay some of his debts and the chances are that he will allocate that money to the debts he perceives to be the most pressing. You need to make sure that your debt is in that category.
Debt recovery success depends on taking swift action when a debt becomes outstanding, and using a firm, no nonsense approach that leaves your debtor in no doubt that you intend to be paid. This can be done for you by a debt recovery agency, but the high prices charged usually put most businesses of initially and they delay starting the collection process in the hope that the outstanding account will be paid. A polite but firm letter is often the best way to start the debt recovery process, some businesses have a success rate of over 90% by just sending out the first letter.
Using a debt recovery programmed, like iCollect, allows you to easily undertake the first steps of debt collection yourself, without needing to use the service of an expensive debt collection agency. The low cost means that you wont hesitate to start your debt recovery process as soon as the debt becomes due, giving you a much greater chance of success. The letters that you send out are designed to achieve the best possible response and payment rate. In effect a debt recovery programme, allows you to become the "squeaking hinge" and ensures that your chances of debt recovery are greatly increased, without being a drain on your time or cheque book.
Visit the Author's website: http://www.australiadebtcollection.com.au
