As a small business owner, you may not yet have thought of a plan to collect outstanding debts. The thing about business debt collection is that it happens to everyone and the most important factor, when faced with recalcitrant customers, is how you respond.
Managing commercial debts is not just about collecting money from customers who won’t pay. When handled well, business debt collection can provide an opportunity to build better relationships with your debtors and recover debts, while avoiding often costly litigation.
First of all, remember not all debts are equal
As a small business owner, collecting outstanding debt is never an easy feat. It can be a frustrating ordeal when clients delay paying for your products and services, or worse, refuse to pay altogether! At some point, businesses will encounter clients who either will not pay on time or won’t be able to afford the full amount for the services rendered, and how you collect those debts will reflect heavily on your brand image and reputation, both of which you need to protect.
As Bartercard explains it, “We know losing customers isn’t a viable option after all the time and effort you’ve expended trying to win them over. So, how do you approach debt collection without running the risk of losing your customers?”
Ways to approach debt collection
The first rule to remember is to be strategic in how you approach each one. Treat every call with confidence and professionalism, and debtors will counter accordingly to your tone. It’s also crucial to have proper documentation should a debt ever lead to a legal battle in court, so when you interact with or talk to clients, take notes, certify and copy e-mail messages, and log client visits.
Keep in mind that your client may be dealing with financial problems that hinder them from making timely payments, and the important thing is to reach out to these categories two and three debtors and come up with a solution that will be fair to both parties. One option is to offer favourable payment plans. Another option is to offer a settlement amount for less than the total amount of debt (more on that later).
Always aim for a win-win situation
Debt collection is inevitable when doing business, but it doesn’t automatically call for destroying customer relations. There are ways to improve the outcome of your debt collection. Though it’s never an ideal situation, you can provide your debtors with a variety of options that will benefit both parties, rather than writing the debt off and receiving no payment at all, thus permanently damaging relationships.
Open new avenues through the Bartercard network
Finally, when a Bartercard business owner is having trouble collecting cash from one of their customers, they may offer to accept part or all of the outstanding amount from the debtor as products or services. Providing the debtor agrees, a Bartercard member can collect their outstanding debt by taking physical possession of the debtors’ products or by accepting a credit note which they, in turn, can on-sell through the Bartercard network.
As the Bartercard member sells their debtor’s products or services through the network, the debtor reduces the balance of their outstanding debt. Become a Bartercard member today and you too can enjoy all the exciting new resources available to you as a business owner.