Small and medium businesses often have a difficult relationship with debt collection. They want to be paid for their services or products but what they don’t want is to come on too strong and risk losing a client. However, this stems from the very idea that asking people for your money back is a bad thing. The first thing that needs to be done is mindset-building.
Your company has done their part of the deal, now it’s time for them to fulfill their part of the deal.
But what do you do when they fail to do so for a while? How do you communicate with them?
Here are some smart tips on collecting a debt:
Start by being friendly but grow more assertive
This is probably one of the simplest, yet most useful debt collection tricks that small businesses can use. The first try to collect debt should be friendly, with a positive and helpful tone of voice. You can either call them, email them, send them a letter or communicate with them in any other way by using this tone of voice.
Keep in mind that they might have forgotten about the bill due date so giving them the benefit of the doubt isn’t such a bad thing. If you have sent them an email to remind them of their bill, this email might have gotten lost in their inbox, so calling to remind them is a good idea.
You could also send a letter that will remind them of their bill and include your invoice once again.
But, if they don’t respond desirably to your requests after this, your tone should grow more and more assertive and direct.
Hire someone to deal with debt collection
Salespeople can be good at this as well, but hiring someone skilled in debt collection specifically can be much better. If you can’t find the right employee, you can provide training and education to one of your current employees and assign them to do this job.
It can be much more useful when one person is focused on that single task, rather than being distracted with other tasks.
Another good idea is calling a collections agency to handle your debt collection for you. Dealing with debt collection can put stress on your operations and this is a good way to help your company continue to work as usual, without the debt.
If you want a simple way to prevent having any debt to collect, you should check your customers’ credit reports before starting a contract with them. This can help you see who to work with and who to be more careful with.
Reach out to your customer’s bank and see how they have handled their bank accounts previously. This can reveal some important red flags that will let you know if your customer is not good to work with. This is especially important when you plan on signing a bigger deal.
Debt collection is your responsibility as a serious business. This should be a high priority for you as your cash flow is crucial to your company. You should monitor this on a monthly basis to continue growing and working properly.