subject: Business Debt Relief - The Top 3 Debt Collection Techniques [print this page] Effective debt collection techniques are necessary to any business, regardless of the state of the economy. Knowing how to persuade your customers to pay their delinquent, past due accounts on time will increase cash flow to your business. After all, as a business owner, you have debts to pay as well. Absent the necessary adequate cash flow, you are risking falling behind on your own bills and commitments. This can lead to problems with your vendors and suppliers. Or to the loss of favorable credit terms with your banker or lender.
Learning how to master your debt collection techniques can mean the difference between surviving and thriving for your business.
Here are 3 important debt collection techniques that will improve cash flow in your business:
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 payment terms can mean that you could potentially be receiving your money sooner rather than later. It also means an unpaid account becomes delinquent within a month so youre within your rights to commence collection services before too much time has elapsed.
2. Written Statements-Reminders & Follow Up Calls
Once an account has become past due, you can issue a written reminder to the customer to gently encourage them to pay their bill to your business. You need to be very careful with the wording you use in your debt collection letter, as the laws surrounding debt collection techniques are quite specific. Sending a written correspondence means you have a record of your attempts to collect the outstanding debt in case of future issues arising.
You should also call the customer and remind them of their delinquent debt, and to establish an estimated time frame to effect payment. Again, be careful in your communications, choice of wording, as well as the timing of your call.
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. Outsourcing To Third Party Collection Agencies
Sometimes no matter what you do, your debtors still wont pay their debts. Even if they are experiencing severe financial hardship of their own, this doesn't help your business if they've received goods or services in good faith and then suddenly found themselves unable to pay the bill.
When you've exhausted all other internal avenues of debt collection options, then its time to call a third party collection agency to pursue the past due balance for you.
Debt collection agencies are experts, and well experienced in the area of collecting past due monies. They are also fully knowledgeable of the laws, guidelines and regulations governing their industry. Representing your business, they will act on your behalf to collect the outstanding debt owed to you. The debt collection techniques used are designed to bring positive cash flow back to your business, sooner rather than later.
Business Debt Relief - The Top 3 Debt Collection Techniques
