You should have a strategic plan to make your debtors pay. The starting point to avoid bad debts is to make sure that invoices are sent immediately after a transaction takes place. The dates, products details and costs of the items sold should be outlined. Ensure the details in your invoice are accurate for successful factoring debt recovery.
Statements should be forwards to the debtor if he or she fails to make payment on the agreed dates. This is a document which communicates the amount you owe the person and the date you were supposed to get the money. This is meant to encourage the person to make the payment. Another option is sending a letter to remind the person the amount he or she is supposed to pay you and the date the repayments were supposed to be done. Be polite in your letter.
If the person does not respond to the reminder, call them. Engage the debtor only. Remind him or her of the products supplied or the services offered and the amount he or she was supposed to pay. Do not forget to tell them that the date of payment is passed. In addition, let them know of the subsequent steps to be taken. After you end the call, write a letter and forward it to them outlining what you have discussed.
If the above means do not bear fruits, you should send the final letter reminding them of the debt and the actions to be taken if the money is not send to you promptly. It is tiresome to drag debtors to court to seek repayment but remember the law is on your side. However, seek legal counsel first before going to court.
Courts do handle these cases but only after it is clear that the debtor is not ready to give your money back. If this is not the case, you will not be handed your money back even if the litigation process works in your favor.
Rather than get frustrated by debtors who do not want to pay you, take preventive measures. Ensure you give credit to those you have proven to be credit worthy. Also, strict terms should be imposed when extending credit. In addition, have the maximum number you can give credit and give incentives to those who repay early.
Remember an invoice cannot be produced in court as evidence that a person owes you money because it is sent after the deal is closed. List down the customers you should not extend credit to.
The stop list has to be updated regularly. The customers listed therein will have to pay in cash if they come to buy goods or services from your business company.
Statements should be forwards to the debtor if he or she fails to make payment on the agreed dates. This is a document which communicates the amount you owe the person and the date you were supposed to get the money. This is meant to encourage the person to make the payment. Another option is sending a letter to remind the person the amount he or she is supposed to pay you and the date the repayments were supposed to be done. Be polite in your letter.
If the person does not respond to the reminder, call them. Engage the debtor only. Remind him or her of the products supplied or the services offered and the amount he or she was supposed to pay. Do not forget to tell them that the date of payment is passed. In addition, let them know of the subsequent steps to be taken. After you end the call, write a letter and forward it to them outlining what you have discussed.
If the above means do not bear fruits, you should send the final letter reminding them of the debt and the actions to be taken if the money is not send to you promptly. It is tiresome to drag debtors to court to seek repayment but remember the law is on your side. However, seek legal counsel first before going to court.
Courts do handle these cases but only after it is clear that the debtor is not ready to give your money back. If this is not the case, you will not be handed your money back even if the litigation process works in your favor.
Rather than get frustrated by debtors who do not want to pay you, take preventive measures. Ensure you give credit to those you have proven to be credit worthy. Also, strict terms should be imposed when extending credit. In addition, have the maximum number you can give credit and give incentives to those who repay early.
Remember an invoice cannot be produced in court as evidence that a person owes you money because it is sent after the deal is closed. List down the customers you should not extend credit to.
The stop list has to be updated regularly. The customers listed therein will have to pay in cash if they come to buy goods or services from your business company.
About the Author:
Connor G. Schiffman has 27 years of experience in commercial lending including factoring, asset based lending, and banking. Connor helps readers manuver through all the account receivable options providing practical and useful knowledge to better understand all your lending options. If you want to learn more about Capital Factoring he recommends you check out www.receivablefactoring.net.
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