Managing your debtors
Managing your debtors is a crucial part of maintaining your cash flow, and recently the Australian Financial Review reported that small businesses in our country are owed $26 billion in unpaid invoices.
But with EOFY fast approaching, did you know that experts estimate that running a basic debt recovery campaign in June can recoup up to 80% of your outstanding invoices?
For the average small business in Queensland, that represents an extra $10,000 to your bottom line in a single month. What’s more, demands for payment are usually more effective in June than any time of year.
According to Angela McDonald, director of debt management firm Optimum Recoveries, debt collection services are not just for big companies.
“Implementing an in-house campaign is absolutely better than not following up at all,” she said, “but more and more small business owners are choosing to outsource to professional collection agencies, in order to recover debts from a few hundred dollars to tens of thousands.”
With Australia lagging the rest of the world in terms of late payments (even South African and Mexican firms pay faster), it is perhaps unsurprising that small business billers are turning to outsourcing their debt recovery. Toronto litigation lawyer successfully handles such cases.
Angela has shared 5 tips that the average Queensland business can learn from how her company manages the B2B debt recovery process:
Tip 1: Debt collection isn’t only for old debts.
The earlier you refer a past due account, the more likely you are to get your money.
Tip 2: Be positive, but firm.
You’ve probably invested time in your relationship with your clients, but you can’t dance around the issue when chasing payments. Of course, never resort to threatening or aggressive tactics.
Tip 3: Outsource.
Consider using an external agency for a single EOFY campaign if you’re faced with a large number of unpaid invoices. It should be more affordable and effective than getting your accounts staff to make calls they’re not comfortable or qualified to make. Debtors will take notice when the call comes from your recovery agent.
Tip 4: Think before going legal.
Going straight to a lawyer may not get your money quicker. If you have unpaid invoices which are giving you grief, a debt recovery professional may be able to assist. Their services often include dispute resolution, payment plan management and legal recovery action with solicitors where required. They can even help to prevent the debt from occurring in the first place.
Tip 5: Choose who you do business with.
If your “best customers” are not paying their accounts on time and continue to stretch the credit friendship, it’s time to question whether they really are your best client. You aren’t a “free bank” and their slow payment practices are disrespectful.
June is the time to talk turkey with your debtors. If you’re not up for that, engaging a debt recovery service doesn’t usually involve setup fees. And some only take a percentage of any invoices they convert to cash.
You can view this article in full over at CCIQ