When you are the designated expert and responsible for managing vital unsecured Domestic and International debt: How can you do everything in your power to make sure these customers are paying on time? How can you ensure there is better credit control in these business relationships?
Having a proactive credit management style is what will effectively protect proceeds both domestically and internationally. This means achieving this with clear communication; streamlined processes; and routines that are well established and always followed. It all boils down to having effective credit and A/R management processes in place to not only reduce the risk of bad debt; but also save money on debt collections. The perfect Credit Manager understands client and country-specific needs (VAT treatment, supporting documentation, etc.) and, monitors and reports on team performance to enable continuous improvement. By taking this more proactive approach, this eliminates many of the problems associated with late payment and loss of profits.
A proactive credit manager:
If you conduct regular credit checks on your main customers and look out for any debtors who are over due by 90 days (unless within agreed credit terms); this lets you know that these accounts may demand some attention. If you wish to carry on a relationship with a customer in this position, it is a good time to try to understand their payment and credit issues. If they are open and honest about their situation and committed to maintaining a relationship with your company, there might be a way to negotiate repayment plans. When you regularly monitor customer activity, this gives you a good overview of all your customer accounts so you can look into who your riskiest customers are. Once you know who is paying you the slowest or, who has stopped paying you altogether, you can begin your collections strategy.
Using strategic predictive analytics is an efficient and cost-effective way to prioritise your collections efforts. This allows you to target the right debtors at the right time, with the right communication strategies. With predictive analytics, you can:
Sometimes when you have taken every available measure to effectively manage these debts and minimise vulnerabilities; there is still a chance that you are unable to retrieve payment. This is the time to coordinate with sales and other departments/divisions on the best ways to handle and resolve these disputes. This means possibly stopping supplies of goods to late-paying customers or starting legal action to recover these debts. A Business Debt Recovery Solicitor is a good option here because they can send a formal letter to a customer(s), which is usually effective. In this letter, they detail what the debtor owes with a set time period in which they need to pay. It’s also a good practice to have a Solicitor on your side when you are trying to recover money from a customer who is not only in a different time zone; but also has different laws and customs to abide by. When this is the only option left, you shouldn’t feel guilty about using these services to collect a debt because ultimately, trust is broken. As a business, they owe you this money for the goods or services you provide.
How to write the best Letter Before Action to recover your debt in 7 days