Debt collection is one of the most important processes when setting up a business. This will serve as the main source of your company’s cash flow. But if your debt collection doesn’t work efficiently for your company’s needs, you might have a problem.
To avoid financial losses, these are some of the mistakes that you need to avoid regarding debt collection.
1. Not whipping up a contract
It doesn’t matter whether you’re a big player in your industry or you’re a small-time company. Anyone who has a business must always put everything on paper first before shaking hands for a deal.
It’s understandable that if you’re a small business owner, you might get shy or awkward about asking your client to sign a contract. But trust us, it’s one of the most important things that you can do for your company.
This piece of paper will ultimately save you from financial losses in the future since your clients are bound to the contractual obligations stated in the contract.
If they decide not to pay you for your services or products, you can always get back at them because they signed a contract.
2. Not doing enough research about your clients
It’s an old trick in the playbook. And every businessman knows this. Before engaging with a client, the first thing you want to do is know more about them. Not only to build a genuine connection but also to know whether it’s even worth transacting with them in the first place.
Ideally, you don’t want your next client to be someone who doesn’t pay up. So it’s only right that you check some of their business and personal credit reports to see if it’s worth doing business with them.
Normally if you acquire business reports, these are some of the information that you’ll see:
- ASIC current extract
- Summary of Partners/Directors business relationships
- Past Credit Enquiries on all Partners/Directors
- Adverse information on all of the Partners/Directors
- Default information on all of the Partners/Directors
- Bankruptcy details
- Insolvency details
3. Not managing the receivables properly
Receivables are what makes a business alive. So if you’re a small business owner, make sure that you focus on this.
But if the company is already growing, you won’t be able to focus on this task since there’ll be so much on your plate. So it’s better that you hire somebody else to handle that. This way, it will be managed properly.
You can either form a team or outsource the work from a debt collection agency. Either way, this strategy will help you accomplish the task, while you get busy growing your business.
4. Not seeking help from debt collection experts
When all things get too messy, meaning there are many clients not paying you, or there are too many late payments from your customers, it’s time to ask for help. And you’ll regret not seeking one.
For these kinds of extreme situations, the only people that might be able to help you are the ones from the debt collection agency Brisbane. Professional collectors can help you get out of the quicksand you are in right now.
They can help you set up efficient collection strategies, talk to the clients, and do the collection itself to make sure that all the unpaid debts will be recovered.
You can hire a team of experts when you’ve encountered big problems or hire them right from the start to handle all your collection.
This way, you won’t need to face financial problems at all. Also, you can save a lot of money since you don’t have to employ people or give them space and computers in the office.