Debt Recovery
It is often very difficult and tedious to get your debtors to pay the money owed to you. Especially if you are in business selling services or products, it is quite a hassle to run after your customers who fail to pay. Often they promise to pay but forget to deliver, just ignore your invoices or simply disappear into thin air. This is time consuming and you lose a lot of income by having to follow up such bad debts. There is nothing wrong with providing credits to your creditors, because this adds more clients and increases sales. But if you are not able to recover your debts on time, it is likely that your business will run into major trouble. As a claimant you need to be aware of your rights, have the necessary skills to effectively demand your dues and follow up with appropriate legal action. To help you deal with these problems effectively, read the following page for more information.
Implement Strategies Such As
One of the best ways to minimise the possibilities of bad debts by following practices such as conducting credit checks before issuing the credit, stating the terms of credit and trade and maintaining a track of all debtors. Follow these few preventative measures:
1. Always conduct a credit card check on new customers (clients)- this includes each client filling a credit application form. A credit card check includes personal and business details, commercial credit check and credit guarantors/references.
2. Make sure that you explain your credit card policy and conditions to your clients.
3. If possible, collect a pre-payment or a deposit before making any supply.
4. Follow a structured method where you can follow up on any overdue debts.
Even after implementing good credit management strategies, you have incurred some bad debts, then you can follow three methods for recovering those debts. The methods are consultation, letter of demand or legal proceedings.
When your client owes you a payment, meet up with the person and seek to recover your money in a professional way. Take the assistance of Community Justice Centres in case any disputes arise. These Centres provide free services in the form of conflict management services and confidential mediation. If consultation does not help you in recovering your debts, then you can proceed to issue a letter of demand to your debtor requesting him/her to pay the amount within a certain period of time. For issuing the letter of demand, you can take the help of a solicitor. The letter should mention the details of the debt and a warning issued to the debtor that legal action would be taken in case the dues are not paid. Remember there are consequences for starting a legal action!