You should have a strategic plan to make your debtors pay. The starting point to avoid bad debts is to make sure that invoices are sent immediately after a transaction takes place. The dates, products details and costs of the items sold should be outlined. Ensure the details in your invoice are accurate for successful factoring debt recovery.
A statement should be prepared and send to the customer if he or she fails to pay on the date he or she promised to make the payments. The purpose of the document is to offer encouragement for the person to pay you. Also, you can send him or her letter outlining the services or good supplied and the time he or she was supposed to pay for them. Do not be rude in the letter.
Call the customer is he or she fails to get back to you. Let him or her know your plans if the money is not sent to you. Before ending the call, agree on when and how the debt will be repaid. After the conversation, write down the issues discussed and send a copy of this document to the client.
If the debtor does not respond to all the above, a last reminder letter must be sent. Let him or her know your plans if the money is not sent promptly. Legal cases to recover debts are a burden but remember the law will support you so do not shy away from this. Nonetheless, let an attorney handle the lawsuit for you.
Before going to court, you should have tried all measures possible to recover your money. If it comes to the attention of the judge than you had not made reasonable attempts to get your money back, you may not be given the amount the debtor has paid even if you win the case.
To prevent encounters with bad debtors, evaluate the credibility of a person before giving them goods on credit. Also, be strict to those who take long to make the repayments if they come back requesting that you extend credit to them. To avoid high bad debts, limit the amount you give out in credit terms. To encourage people pay on time, you can decide to give financial incentives.
Remember an invoice cannot be produced in court as evidence that a person owes you money because it is sent after the deal is closed. List down the customers you should not extend credit to.
Update your list periodically. Ensure this people pay immediately if they come back for more services or goods from you shop.
A statement should be prepared and send to the customer if he or she fails to pay on the date he or she promised to make the payments. The purpose of the document is to offer encouragement for the person to pay you. Also, you can send him or her letter outlining the services or good supplied and the time he or she was supposed to pay for them. Do not be rude in the letter.
Call the customer is he or she fails to get back to you. Let him or her know your plans if the money is not sent to you. Before ending the call, agree on when and how the debt will be repaid. After the conversation, write down the issues discussed and send a copy of this document to the client.
If the debtor does not respond to all the above, a last reminder letter must be sent. Let him or her know your plans if the money is not sent promptly. Legal cases to recover debts are a burden but remember the law will support you so do not shy away from this. Nonetheless, let an attorney handle the lawsuit for you.
Before going to court, you should have tried all measures possible to recover your money. If it comes to the attention of the judge than you had not made reasonable attempts to get your money back, you may not be given the amount the debtor has paid even if you win the case.
To prevent encounters with bad debtors, evaluate the credibility of a person before giving them goods on credit. Also, be strict to those who take long to make the repayments if they come back requesting that you extend credit to them. To avoid high bad debts, limit the amount you give out in credit terms. To encourage people pay on time, you can decide to give financial incentives.
Remember an invoice cannot be produced in court as evidence that a person owes you money because it is sent after the deal is closed. List down the customers you should not extend credit to.
Update your list periodically. Ensure this people pay immediately if they come back for more services or goods from you shop.
About the Author:
Connor G. Schiffman has 27 years of experience in commercial lending including factoring, asset based lending, and banking. Connor helps readers manuver through all the account receivable options providing practical and useful knowledge to better understand all your lending options. If you want to learn more about Working Capital For Small Business he recommends you check out www.receivablefactoring.net.
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