Companies are now facing a lot of financial constraints due to debtors failing to avail the required money on time or even not paying at all which really messes up the planned budget and financial projections. This puts the owners of a Company XYZ in a predicament as they are unable to achieve their goals in an effective manner.However, there are effective debt collection strategies that a Company may use to enable them avoid finding themselves in a fix.
EFFECTIVE DEBT COLLECTION STRATEGIES INCLUDE:
- Do a background check: By doing a background check I mean that you should look into your customers’ credit history to ascertain whether they are in a financial position to pay or whether they have any uncertainty history as per the Credit Risk bureau before you can actually provide the services they need. You can also decide to give the services to the customer but ask for an upfront payment to ensure you don’t plunge into bad debts.
- Be swift in sending invoices: In most cases, the reason why customers don’t pay is because they receive invoices long after the service has already been provided to them so they tend to ignore or rather, struggle with planning their finances. Unlike if you send the invoice early, it gives the customer time to plan their budget and avail the required money within the given grace period.
- Allow installment payments: If you give your clients an easy payment method, it enables them to provide the full amount within a given time frame and not weigh heavy on their financial position. It could be that the total amount is a lot to pay at one go, so paying in installments would enable people to afford the services without a dent in their budget.
- Talk to your customer: You should build a good relation with your customers so that they are able to engage with you in topics such as financial difficulties. Don’t engage in fault finding but instead let them know you understand what they are going through and are willing to support them in other avenues to ensure they eventually pay off the debt. This also enhances the relationship between you and the client.
- Use a collection agency: if worse comes to worst and you don’t know what to do, you can liaise with the agencies so that delinquent debts can be collected. Some collection agencies also negotiate settlements with consumers for less than the amount owed. You will incur a small fee when you decide to use thus strategy but so long as you recover your money from debtors, then you are good to go.