Cash flow is very important in any business. You may not be in business for long if you have too many outstanding payments from customers. As such, applying steps for easy debt recovery can mean the difference between your business crashing or surviving. Here are the steps to make the delicate process of debt recovery easier.
What is Debt Recovery?
Debt recovery describes the situation where a loan remains unpaid and a third party is hired to retrieve the money. Furthermore, such a third party is referred to as a collection service.
Steps for easy debt recovery
Generally, you can follow the process below for easy debt recovery.
1. Send a friendly reminder
First, you could phone or email the customer to remind them of the overdue payment. Then, ask them when you are to expect it. Preferably, you should have some record of the conversation or email. Besides, it is important to be nice when making this reminder.
2. Issue a second overdue reminder
Second, you could get another person in the same business to contact the customer. Surely, you would have briefed them beforehand on the situation. Usually, you will get a response either from the customer directly or from your intermediary. Again, remain polite during this process.
3. Give a final notice
Third, if the debt continues, you can give the defaulter a final phone call or email to remind them of non-payment. Still, you should be polite here. Likewise, try to keep to guidelines on debt collection to prevent a legal challenge from the customer.
It is not out of place at this point to enlist the assistance of a debt collection agency for your debt recovery.
4. Initiate a personal contact
Next, if the customer has not responded, you can pay a personal visit. Again, you need to be calm and professional. Perhaps, you may leave this visit to the professionals if you feel you are too close to the situation.
5. Issue a formal demand letter
Thereafter, if the situation persists, you may issue a letter of demand. Debt collection agencies offer such services as delivering formal letters of demand.
Finally, the debt collection agency takes up the process which may include legal actions where necessary.
A few tips to reduce debt
Train your staff properly. First, your sales process should be streamlined to focus not just on the number of sales. Also, it should consider actual money collected.
Second, implement financial policies and Standard Operating Procedures that are a part of staff induction.
To wrap it up
Recovered debt can be a great boost to revenue. As such, your steps for easy debt recovery should be certain. Ultimately, you reduce your costs and save time. More so, you maximize resources.
