You should have a strategic plan to make your debtors pay. The starting point to avoid bad debts is to make sure that invoices are sent immediately after a transaction takes place. The dates, products details and costs of the items sold should be outlined. Ensure the details in your invoice are accurate for successful factoring debt recovery.
Statements should be forwards to the debtor if he or she fails to make payment on the agreed dates. This is a document which communicates the amount you owe the person and the date you were supposed to get the money. This is meant to encourage the person to make the payment. Another option is sending a letter to remind the person the amount he or she is supposed to pay you and the date the repayments were supposed to be done. Be polite in your letter.
Call the customer is he or she fails to get back to you. Let him or her know your plans if the money is not sent to you. Before ending the call, agree on when and how the debt will be repaid. After the conversation, write down the issues discussed and send a copy of this document to the client.
If the debtor does not respond to all the above, a last reminder letter must be sent. Let him or her know your plans if the money is not sent promptly. Legal cases to recover debts are a burden but remember the law will support you so do not shy away from this. Nonetheless, let an attorney handle the lawsuit for you.
Courts do handle these cases but only after it is clear that the debtor is not ready to give your money back. If this is not the case, you will not be handed your money back even if the litigation process works in your favor.
It is better to prevent bad debts than struggling to recover them once they occur. To do this, ensure you have determined that a customer is credit worthy before giving him or her credit and you can also impose stricter conditions and terms to those who delay payments. Limit the amount you give on credit and you can also give an incentive if customers pay before the due date.
Remember an invoice cannot be produced in court as evidence that a person owes you money because it is sent after the deal is closed. List down the customers you should not extend credit to.
The stop list has to be updated regularly. The customers listed therein will have to pay in cash if they come to buy goods or services from your business company.
Statements should be forwards to the debtor if he or she fails to make payment on the agreed dates. This is a document which communicates the amount you owe the person and the date you were supposed to get the money. This is meant to encourage the person to make the payment. Another option is sending a letter to remind the person the amount he or she is supposed to pay you and the date the repayments were supposed to be done. Be polite in your letter.
Call the customer is he or she fails to get back to you. Let him or her know your plans if the money is not sent to you. Before ending the call, agree on when and how the debt will be repaid. After the conversation, write down the issues discussed and send a copy of this document to the client.
If the debtor does not respond to all the above, a last reminder letter must be sent. Let him or her know your plans if the money is not sent promptly. Legal cases to recover debts are a burden but remember the law will support you so do not shy away from this. Nonetheless, let an attorney handle the lawsuit for you.
Courts do handle these cases but only after it is clear that the debtor is not ready to give your money back. If this is not the case, you will not be handed your money back even if the litigation process works in your favor.
It is better to prevent bad debts than struggling to recover them once they occur. To do this, ensure you have determined that a customer is credit worthy before giving him or her credit and you can also impose stricter conditions and terms to those who delay payments. Limit the amount you give on credit and you can also give an incentive if customers pay before the due date.
Remember an invoice cannot be produced in court as evidence that a person owes you money because it is sent after the deal is closed. List down the customers you should not extend credit to.
The stop list has to be updated regularly. The customers listed therein will have to pay in cash if they come to buy goods or services from your business company.
About the Author:
Connor G. Schiffman has 27 years of experience in commercial lending including factoring, asset based lending, and banking. Connor helps readers manuver through all the account receivable options providing practical and useful knowledge to better understand all your lending options. If you want to learn more about Us Business Funding he recommends you check out www.receivablefactoring.net.
