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Debt Collection Advice for Small Businesses

Last modified: November 21, 2023

Debt Collection for Small Businesses

Advice on Debt Collection for Small Businesses

A business’s lifeblood is its ability to sell goods or services to its customers.

If something jeopardises this, such as a non-paying customer, they put your entire company at risk.

In the vast majority of cases, many small business owners are unsure of what to do when someone owes them money.

As such, many come to Frontline Collections looking for debt collection advice for small businesses.

It is common for business owners to ‘write off’ a debt.

This may be because it is too costly to recover the debt in-house, as it would take up too much valuable time which is not available.

It could also be that it is too ‘awkward’ to attempt recovery.

This is sometimes the case if a company owes them money by a company that they do not want to challenge for fear of risking a good business opportunity.

An example of this could be a small firm that a nationwide company contracts for a service that later does not pay.

Regardless of the reason, you should never abandon a debt under any circumstances.

It is common knowledge that chasing a payment by yourself can be a very costly process.

With this in mind, the best way to tackle the problem is to prevent it from happening in the first place.

 Debt Collection For Small Businesses | Get Expert Help From A Professional Private Debt Collection Agency Now

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Debt Collection Advice for Small Businesses – How to Prevent Debt

One of the most important measures you can take is to ensure that you set up payment terms for all agreements you make. It is one of the top tips to collect a debt from a company.

This is one of the best pieces of debt collection advice for small businesses anybody could give you.

Doing so will provide protection and minimise the risk of bad payers later on in the process.

There are a variety of steps you can put in place into your sales and delivery processes to clarify when and how customers will pay you.

Setting up a robust payment terms agreement will help you to enhance your credit-control process.

With all the examples below, it is critical to document everything.

You should ensure that the customer signs and understands all documents which relate to their payment obligations.

If there are any disputes or complications later on, you can refer to these documents.

Confirming Your Order with the Customer

When you have a purchase order from your customer, you should send them confirmation that you have rec the order.

You should quote their purchase order number as a reference.

A common example everyone is familiar with is something like an email copy of a receipt when buying something from a website.

You will fill your cart on the site, complete the purchasing process and get a confirmation email – the process you should follow is like this.

If you and your customer have agreed on a deal without a purchase order, you should get them to sign a written order on letterheaded paper.

Debt Collection Advice for Small Businesses Frontline Collections

Make All Business Invoices as Clear as Possible

All documentation that you send to your customer should be as clear as possible.

Many invoices we have seen in the past are very vague or someone has sent them to customers in a difficult to understand way.

An example of this could be an invoice that someone has printed off and scanned in using a poor quality scanner.

Details of goods supplied, exact time and dates, costs and payment terms should all be clear and visible on your invoices.

All payment terms should include a due date to remove any uncertainty of when your customer needs to pay you.

Monthly Statements

Issuing monthly statements to your customers is a good measure for credit control.

Statements like this will keep your customers informed of their upcoming payment obligations.

Larger firms, in particular, only pay when they receive this type of paperwork, so it must get sent where appropriate.

Reminders and Warnings

Most modern accounting software systems such as Sage or Xero will automatically send out payment reminders.

This is if a customer does not pay on time.

This is an excellent tool, as it allows your accounts team to focus on value-based tasks.

This is as opposed to having to memorise the payment dates of all customers.

Maintaining a policy of automatically-generated reminders…

…lets your debtors know that you are not going to forget what they owe.

In some cases, a final reminder letter that requests payment is enough.

Debt Collection Advice for Small Businesses – Your Livelihood

Businesses of every size from those who are self-employed, small businesses and large organisations…

…rely on their customers’ paying them.

Without this, the entire organisation is at risk.

This is an ongoing concern for any business owner.

Applying the correct preventative measures for invoicing and payment reminders is important.

It is an excellent way to reduce the risk of bad payers.

If you back these measures with a firm but fair hand to chase late payers…

…you have provided yourself with the best chance of eliminating credit control issues.

Despite measures such as these, there will always be those who are determined not to pay and so slip through the net.

When this happens, you should turn to a professional debt collection agency for support.

An agency that specialises in private debt collection for small businesses can provide the best solutions.

Take Action – Instruct a Professional Debt Collection Agency

In a perfect world, every customer would pay on time and there would be no complications.

Those that do not will only have failed to do so due to an oversight.

If this were the case, the methods we have described above would be more than adequate to ensure your customers pay on time.

The situation can be very different in the real world.

When you are running a business you must take every measure possible to ensure the stability and future of your enterprise.

There will always be those who will use every tactic possible to avoid paying money that they owe.

When all diplomatic attempts have failed and you are getting nowhere, you need to consider an alternative.

Your time is valuable, and every action you take must come at a cost.

If you are in a difficult position where a customer owes you money, instructing a professional debt collection agency is the best option.

Debt Collection Advice for Small Businesses – Professional Help

For all delinquent accounts, you should instruct a professional debt collection agency.

Whereas in the past business owners have been hesitant to use this option, it is becoming more common in the modern business climate.

There are many benefits to instructing a debt collection agency like Frontline Collections.

Debt Collection For Small Businesses | Get Expert Help From A Professional Private Debt Collection Agency Now

Our friendly team of Debt Collection Experts is happy to help you today