Debt Collection Tips

So there you are facing bad debt and getting angrier. Your money, your hard work and no return. The guys don't even answer your calls. Sorry Mr x is away from his desk, would you like to leave another message on voicemail (like that will make any difference).

Alright lets go back in time - what could you have done differently, when did you realize this was going to become a problem? how would you have dealt with this knowing what you know now?

All good questions so let's analyse and see what we can come up with.

First off why did you wait? You knew it was due. You could have chased it sooner. Then things got worse because not only were you owed money but another order came in and you were so busy feeling good about the new business you didn't question it. Maybe a credit check way back at the beginning of your dealings with this company might have revealed something - "Who has time to do all that. I get an order it's needed like yesterday. They seem to be bona fide what else could I have done"? Saved yourself a possible bad debt and bruising loss off your bottom line is the answer. So, first things first. Act big - what I mean is act like a big company - if they are solid - they will understand your actions. After all if they don't, it probably means they will be in the same bad debt boat themselves before too long!

Limit the amount of credit you give and stick to it. Make it company policy - "what can you afford to lose" Don't say zero. You are in business. Business is risk. Know the amount of risk and be prepared for the loss, budget for the loss. Work it into your costs. It's a business cost so it's quantifiable, so quantify it. Retailers add in 10% to allow for shop theft. Bad debt is pretty much the same. So budget for it accordingly. Work out how much bad debt cost you last year as a percentage of sales and increase your prices accordingly.

If it happens you won't lose sleep in fact you will congratulate yourself for having had the foresight to prepare for it.

So, credit check new accounts. chase overdue bills early and prepare for the worst by budgeting for the loss. It really comes down to that. Sure you can use debt collection agencies but once it gets to that stage, it really is easier on yourself to just give up on it. If they succeed - great treat it as a bonus otherwise move on.

About the Author

Ray James is a business entrprenuer. He has written several articles on the subject of debt collection tips. He can be contacted at info@debt-collection-tips.com