How to collect business debt efficiently and without the hassle

Most of our clients ask us the same questions about how they can collect business debt quickly and what procedures they can put in place to prevent late payments in future. What is the most cost effective solution to collect business debt? Our answers are always the same. Your business needs a credit policy. Whether small, medium or large sized, every business must have set procedures in place when collecting money from their customers that you have privileged with payment terms.

Listed below are 4 key points on how a credit policy can assist your business to collect business debt through pre-emptive action:

1) Credit checking – a first action for all new business should be to credit check the customer. Credit reports are very cheaply priced and start from £4 for a basic assessment which is a small price to pay to give you a good piece of mind.

2) References – find out who they have done business with in the past. Did they pay on time? Contact their previous creditors and ask what their attitude was like and if they lived up to their promises when it came to payments.

3) Payment terms – consider lowering your payment terms if you are not 100% happy with a customer’s credit score. 7 or 14 days is acceptable and you may even want to take 50% upfront before any work is commenced to protect your financial position.

4) Follow up quickly – should a debtors terms be exceeded and you need to collect business debt, it is essential you follow up with slow payers immediately, as once they spot a weakness in your collection processes, some debtors will exploit it without much remorse.

To collect business debt with speed and efficiency you first have to put in place the correct policies and procedures to protect your business. Although you may be excited about a new business opportunity, if you are only wasting time further down the line trying to collect business debt, then you are effectively working for free. In that time you could have concentrated on trying to attract more worthy credit-trusted customers.

If you are struggling to collect business debt, please don’t hesitate to give us a call on 01332 565 350 for a no obligation assessment of how we can help your business.