A simple debt recovery process for small business

For small businesses, cash flow is very important. So it’s important to stay on top of chasing outstanding payments from customers (or recovering debt). Having unrecovered hanging over business can crash it. However, collecting debt is a very delicate process. They are many legal minefields to work through to protect you and the customer. So, if you feel overwhelmed it’s important to enlist the help of a debt collection agency like us! Otherwise, your company should devise a debt recovery process, and we’d love to help! So, if you’re small business doesn’t have a debt recovery process yet, read on!

If you’re struggling to collect payment, this process will help you stay on top of your ‘slow payers’. And of course, you can always call in the big guns (us!) to help you sort out pesky debt.

Debt recovery process

You may like to use the following procedure or parts of it to help develop your own. Apart of your debt recovery process is knowing when to call a debt collector, like us! If debt becomes too stubborn, then it’s time to call a debt collection agency. It’s important to know when to call in the experts to help get that money back in your business.

1. Friendly reminder

Once the payment is overdue phone or email the customer. Remind them that payment is due and has not been received. Ask them when they will be paying you and keep a record of the conversation or email. Remember to be nice, they may have forgotten or paid into the wrong bank account. It’s important not to attack the customer, just inquire politely about the unpaid income. You’ll want to avoid the customer becoming defensive.

2. Overdue reminder

If they do not respond to the phone call or email, try contacting someone else in the business. Let them know who you are trying to contact. This often results in a return response from either the person you were trying to contact or someone else from the business. Throughout the debt collection process, it’s important to remain polite to your customer. Whether you intend of having them as a client again, or not, to avoid further legal battle, stick to alternative means of communication, not aggressive.

3. Final notice

When the customer has not paid as per the terms and conditions agreed upon, give them a final phone call or email to let them know that you have not received payment. Again, it’s still important to remain polite during this process. Don’t let your anger and frustrated dictate the conversation. To avoid a legal challenge with your customer, remember to adhere to debt collection guidelines. If you feel overwhelmed by unrecovered debt, enlist the help of a debt collection agency (that’s us!).

4. Direct contact

If there still isn’t a response consider visiting the customer in person (or phoning them if the previous contact has been via email) to ask for payment. This sometimes helps create a personal relationship with the customer that could useful future payments. When contacting people regarding debt, it can be tricky and sensitive. That’s why it’s important to remain calm and professional. If you think you’re too close to the situation, then it’s best to call in the experts. If you need some debt taken care of, enquire today by filling out our form.

5. Formal letter of demand

In the event that all attempts to contact them have failed, consider sending a letter of demand. This should be only done as a last resort, as it can damage your relationship with the customer.

Formal letters of demand are just one of the many services we provide.

If you still haven’t been paid, then you should consider using a debt collecting agency to collect the outstanding money from your customer. It is useful to check a list of fair debt collection practices, developed by Consumer Affairs so you know the boundaries of debt collection.

# Helpful Tip:

Train your staff

It’s important staff are aware of payment terms for their customers. Often sales staff are rewarded for the number of sales they make and so they may ‘bend the rules’ to book another sale. One way to avoid this is to reward your sales staff once the money has been collected not when the sale is made. You should have financial policies and procedures manual which every staff member goes through as part of their induction.

We hope this has helped you with your cash flow needs. If you have any further questions you can contact us on 1300 799 067. We have expert debt collection managers to handle each step of your case. Don’t be overwhelmed by uncollected debt, instead, call in the professionals!

Why ProfColl?

When it comes debt collection sometimes you need the help of the experts. That’s us! You can trust 23 years in experience, and a commitment to expert and professional debt collection. ProfColl understands that when it comes to debt, things can get tricky. That’s why we employ a professional manner and expert strategy to help recover your debt, so you can get back to what you do best. At ProfColl, we think that we shouldn’t get paid unless you do. That’s why if we fail to recover your debt, we won’t charge you for our service.

Make sure your business is in safe hands with ProfColl. DIY works for homewares, however, for debt collection it’s best to turn to the professionals to avoid unnecessary legal matters or fees. At ProfColl, we adhere to all the correct protocol and uphold a professional manner when working to collect your debt. So, if you’re looking for some help with pesky debt, fill out our enquiry form and tell us about your situation. From there, we’ll assign your case an experienced manager that get to work recovering your debt and returning your money back where it belongs.