Debt Recovery Strategies Every Business Owner Should Know.

There are customers and THERE ARE CUSTOMERS. There are some you can NEVER do right by, some that bring unrealistic expectations,  rude ones, the ones that like to engage your time and effort repeatedly without buying.  All sorts. 

We will be focusing on a special sect of these people.  The owing customer. Now, let's play fair, there are some who simply just forget they are owing. That's on you the seller by the way. But we will get to that in more details as we proceed. There are however some customers that may not be willing to pay after getting a service or a product. Thank goodness for all kinds of customers,  they keep us in business. But managing your receivables is paramount to staying afloat and keeping cash flow in check. Paying little attention to this could cost you your business.

This article however, will teach you how to handle the last set of customers. With the other classes of customers, what you need is a little bit more patience. It gets better.

Over time we've heard entrepreneurs share different methods of debt collection that have worked for them and their businesses. This piece picks out 4 effective methods and pools them together, so you have a balance chest available to you.

You run a small business?

You can begin here

Communicate in clear terms the payment obligations of the client: 

Getting this step right from the beginning will save you a lot of heartache and disappointment. This had to come first because with small businesses there's every tendency for your customers to be or become friends. Hence, the possibility of shying away from money talks. At this point we are talking about  contract papers and clearly defined terms of engagement. When it's time to talk money, keep it straight and forward. You don't want to have your client unsure about their obligations. It must be stated clearly both verbally and in writing.

Organize a workable payment plan: 

Business owners must realize how important it is to work around the different kinds of customers the business deals with. Make options available to your debtors. It's not inappropriate to size up a client and proffer a workable payment plan beforehand. If your client is struggling with paying a lump sum because they can't afford it at once, then set up a workable plan and communicate with your client. It's possible that the thought of paying the total sum may be overwhelming. They need to know that you can meet them where they are at and work around what they can afford.

Set up regular payments reminders for the client.

Before this method is engaged. There's what is referred to as soft reminders in debt chasing, it's where the business sends official reminders to the client before the payment becomes due. It is important that at this stage the customer should not be spammed or pestered. When the payment and grace period expires without the money coming in, you can resort to regular payment reminders. No one wants to keep getting mails every 2 days reminding them of the debt they owe. That should be enough motivation for the debtor to pay up. Try this method after the first two prove unproductive.

Get Extra:

This one is for customers that are out to totally frustrate you. For stubborn and hard headed debtors who would just not prioritize communicating with you, or the ones that intentionally evade all your collection efforts or go as far as denying the obligation. You could:

Use social media as a weapon. Nobody wants to have bad reviews trailing them everywhere. Although a ruthless method, it has proven productive over and again.

Use a debt collector: this is only necessary for huge sums and when you're tired of expending energy in that direction.

At the end of the day, bad debts are sometimes inevitable,  it's also wise to know when to stop chasing, count your losses and let go. 

With koboaccountant on your side, what you get is professional aid for your business, irrespective of whatever stage it currently is at. 

Best part?

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