Debt recovery strategies
If you’re looking to gain insights into the best practices for managing overdue payments while maintaining positive relationships with clients and minimising financial losses, this is the debt recovery guide for you.
Here, we’ll take a look at business debt recovery and how to recover debt from a company and will also cover various solutions and approaches to debt recovery.
Debt recovery solutions
There are a number of different debt recovery solutions which allow you to manage overdue payments. Here are some of the various approaches you could consider, such as:
Negotiating payment plans
Although this might not be an approach you’d most like to consider, sometimes it’s necessary. Often, customers want to pay their debt but are struggling and need some help.
By offering flexible payment plans that work with the customer to make it more manageable, you’re more likely to see your money. Be open to negotiating payment plans for work for both you and the customer - you will be surprised how far a little humanity can go when it comes to debt recovery services.
Utilising third-party debt collection agencies
If your own efforts haven’t succeeded in recovering debt, you might want to turn to debt collection agencies. These third-party agencies will allow you some peace of mind while they use their resources and expertise to collect your debt. This approach has the potential to recover 100% of your debt, but beware that it may damage relationships, so make sure you consider your priorities first.
Leveraging legal action
You may need to consider legal action if you aren’t finding any previously mentioned debt recovery strategies useful. Before taking things to court, it’s usual for creditors to send a formal demand to the debtor to let them know that if they don’t pay within a specified time frame, you will proceed with court action.
You can then issue a claim through the county court whereby a judge issues the debtor to pay the money. Note that this doesn’t always work and from here, the High Court can issue enforcement officers to seize assets and property to settle debts.
Offering settlement discounts
Offering settlement discounts works well as a debt recovery solution because it encourages customers to pay whilst still maintaining a good relationship. You can choose a 5% discount if the debt is paid within two weeks, for example. This way, you still receive the majority of the money, but your customers feel happy too.
Preventative measures
You’ll be pleased to know that there are several preventative measures to reduce the risk of ending up in a situation where you have to employ debt recovery strategies. Here are the two main preventative measures for business debt recovery.
Credit checks
It’s important to understand the financial health of a company before agreeing to do business with them because the success of your business depends on a good cash flow. The decisions of any business you work with will have an impact.
If a client doesn’t pay their bills, your company might struggle to pay its bills. So, working with any business that you’re not sure is 100% reliable is risky. Performing a full credit check before agreeing to work with a business is the ultimate preventative measure.
Clear contract terms
Having a clear-cut contract will save you a lot of stress should any issues occur. Make sure you specify what payment you’re expecting and when. Don’t leave any room for interpretation, and don’t sign a contract that isn’t 100% clear.
Never leave these things because you’re afraid of ruining a relationship, even if it’s with someone you think you can trust. Remember that a contract is a legally binding document, so signing one is not to be taken lightly.
It can be difficult to balance the need to recover debt with the time it takes. With a mixture of professional support and strategy, you can recover your debt with as little stress as possible. Contact Creditserve on 01992 414222 to take a look at what options there are for you.
