5 Ways To Recover An Outstanding Debt
Chasing up payments and debt recovery is a job that most businesses will be familiar with. The process can take a lot of time and effort at the best of times, but an effective approach can improve cashflow and reduce the amount of bad debt that you have to deal with.
Here are 5 ways to recover an outstanding debt:
1. Effective Accounting & Invoices
Okay, so this is not so much a way to recover outstanding debt as a way to ensure that everything goes smoothly where your credit is concerned; call it a preventative measure. Effective accounting goes a long way, so make sure you invoice promptly, state your terms clearly, and follow up on your invoices. Send a repeat invoice gently reminding the customer that it is time to pay. There really is no need to start extreme.
2. Speak With Your Debtors Personally
If you have a good relationship with your debtors then you may be able to avoid the courts by speaking with them, at first informally. A personal phone call can often clear the air, and you should be able to discern a genuine reason for late payments from stall tactics and excuses. It is better for everyone if you can solve the issue in this way.
3. Mutually Beneficial Payment Plans
You could consider setting up a mutually beneficial payment plan. This is a way for you to recover your outstanding debts, while maintaining good relations and keeping away from more formal legal action. In this case you work out a repayment schedule that the debtor can keep to, and you can also factor in any charges for late payments.
4. Debt Collection Agency
If the informal and personal methods mentioned above do not help you to reach a resolution, but you still do not consider the matter court-worthy, then you can employ a debt collection agency, and transfer the account over to them for collection. It is their job to recover your outstanding debt, and they will often offer an instant payment on unpaid invoices to offer a cash injection in the meanwhile.
5. Legal Action & Courts
In cases where debtors are refusing or unable to make payments, legal action may be required. It is recommended that you try to recover your outstanding debt away from courts where possible, but if needs be you may have to resort to this. Before you actually end up in court you send a formal letter of intent to let the debtor know that you intend to take action, and outlining a demand for payment. This in itself can have a powerful effect.