Collecting Your Small Business Debt Without Stress
When starting a business, one of the main problems that you will have to prepare yourself for is the trouble of collecting debts. As in any other business you need a regular stream of revenue and cash flow to keep the company functioning. Since most small businesses aren’t prepared to survive the troubles which their initial year can bring, it is wise to have a devised strategy for any type of emergency.
A discouraging statistic which should convince you that the previous statement isn’t an extreme one is the fact that eight out of ten businesses fail. The financial aspect is always the most bothersome factor of running a business. While the general rule of thumb is to always have a safety net made out of insurance and smart investments, the great majority of owners fail to implement practical solutions and plan for every possible situation. If you’ve found yourself in a situation where you are simply forced to collect your debt from non-paying clients you will find out how to do it in the best possible manner down below.
Understanding the Customer
Although you are probably aggravated and disappointed with this particular individual, you will have to start by questioning their character and your objectivity. This has nothing to do with empathy, nor am I trying to suggest that you should forget about your hard earned money, but if you are able to observe the situation from their perspective you will definitely gain an insight on how to approach them.
Be advised that your initiative may even have a positive response. If you manage to pull this through in a fashion that will secure both yours and your customer’s satisfaction, that customer will certainly not hesitate to purchase from you in the future as well or refer your business to their friends. We will start by categorizing your non-paying clients in three different sections:
- Clients who intend to pay but are unable due to financial troubles.
- Clients that would rather delay payments.
- Clients with no intent of making a payment at all.
Once you determine what type of a client is your non-paying customer, you can start implementing some of the following strategies. However, be advised that once you’ve reached a conclusion that your customer is purposely avoiding to pay their debt, it would be a smart choice to look for a debt recovery agency and legal help as soon as possible. Hopefully, you have a signed contract in that case.
Collecting Debt: Tactics and Strategies
You will definitely want to try and keep your relationship with this customer intact while insisting on collection of debts. Bear in mind that your professional reputation also has a price.
- Send a formal letter which will serve as a reminder. Don’t procrastinate with this initial step and keep your writing tone formal but friendly. Inform your client that you’ve noticed he/she didn’t come through with the payment and inquire about the status. Send warm regards and underline that you value the business between the two of you.
- Try not to pester people, but keep insisting. For example, it is acceptable that you leave one message on their voice machine per day. Two is excessive. Let them know that you are keeping a clean record and that you are depending on their regular payments.
- Be supportive. If your client is trying to explain his situation you should listen to what he/she has to say and show empathy. If you insist on an aggressive approach you might throw them off and actually delay the process of payment additionally. However, if you manage to come up with a solution by working with that problematic client, you’ve gained a great referral and a customer for life.
- Never get personal, no matter how personal your client gets. Be direct, keep your conversations brief and up to the point, and make sure that your debtor doesn’t feel threatened.
- Send letters through a collection agency, it is always a good idea. If you insist on doing it yourself than know how to do it right. However for an affordable fee an agency will write a series of letters and send them out in your behalf.
- Debt agency will usually agree on 50% cut and pay you right ahead. If the debt remains unpaid for more than six month, this is one of the options that you will have to rely on.
- Settle for a discount should be your last option. However if the cost of pursuing that particular customer is only making the problem bigger, offer a settlement and write off their debt through a mutual release.
Keep your revenue stream consistent, keep a clean record of your clients’ status and react as soon as possible. Procrastination will get you and your business nowhere. As an owner you will have to learn to adapt to stressful situations such as this one is, it is considered as a regular cost of doing business.
In a Car Accident? Here’s How to Find a Great Lawyer
If you’ve recently been in a car accident, you know that it can be an overwhelming experience. Not only do...
Considering Therapy? Here’s a Few Common Therapy Techniques Explained
If you’re considering therapy as a means to improve your mental health, you may be curious about the type of...
Top 5 Home Repairs You Should Never DIY
DIY home repairs are all the rage these days. But before you jump on the bandwagon, there are some things...
The Power of CBD Oil for Relaxation: How to Use it for Sleep and Stress Relief
If you’re struggling to get a good night’s sleep or feeling stressed, try CBD oil. CBD oil has a moment...
Benefits of Getting your Mobile Phone Repair
Mobile phone repair is a task that needs high skills and experience. That is why we always recommend users trust...
Great Ways To Clean To Get Your Security Deposit Back In Full
Moving is almost always stressful as there are tons of things to plan and do. Getting your security deposit back...
DIY Garage Door Repair: Tips and Tricks for Fixing Common Problems and Maintaining Your System
If your garage door needs to be fixed, wait to call a repairer. Many common problems can be fixed quickly...
7 Tips to Choosing the Right University for You
Are you considering continuing your education at university? If so, it can be overwhelming to decide which school is right...
3 Ways Loans from Credit Unions Are Different From Major Banks
If you’re in the loan market, you may wonder if a credit union is the right choice. Here are three...
The World of Coffee: Exploring the Aromas, Flavors, and Benefits of the World’s Most Popular Beverage
Coffee is one of the world’s most popular beverages, enjoyed by people of all ages and backgrounds. It’s also one...
New Driver? 5 Things to Consider When Looking for Driving School
When it comes to choosing a driving school, there are many factors to consider. Not all driving schools are created...
Landscape Irrigation Systems: The Basics
If you’re a homeowner, you know that keeping your lawn and landscaping looking nice can be a lot of work....
5 Things to Look for in Luxury Hotels
When it comes to luxury hotels, there is a lot to look out for. Here are five key things that...
Is There a Difference Between Commercial and Residential Concrete?
If you’re a contractor, you know that concrete is a versatile construction material. But did you know that there are...
5 Tips to Find the Right Litigation Firm
When it comes to selecting the right litigation firm for your legal needs, choosing wisely is of utmost importance. It’s...
Tech8 years ago
Creating An e-Commerce Website
Tech8 years ago
Design Template Guidelines For Mobile Apps
Business3 years ago
What Is AdsSupply? A Comprehensive Review
Business7 years ago
The Key Types Of Brochure Printing Services
Law2 years ago
How Can A Divorce Lawyer Help You Get Through Divorce?
Tech5 years ago
When To Send Your Bulk Messages?
Travel11 years ago
Who Else Wants Also Nfl Hat
Tech2 years ago
5 Link Building Strategies You Can Apply For Local SEO