Debt collection is as important as any other functions of a company. Whether big or small. Although, small owners are more susceptible to financial risks especially if delayed and unpaid payments from clients start piling up. That’s why uncollected debts must be settled before these ruin your company.
If you’re a business owner, you must be wondering why it has come to this. Well, mistakes certainly were made along the process. Not only by the irresponsible clients who do not pay on time or at all, but also by the business owner themselves.
If you’re running a start-up or a small company, you should avoid these mistakes as much as possible:
1. Skipping the Written Contract
In business, everything must be put into paper. And agreements are no exception. Especially if you’re a small company, contracts are your protection against big clients who refuse to pay up. Trust us, these pieces of paper can make or break your company.
There will be a time that even your longest-time clients will also neglect their responsibilities. And everything could go south from there. That’s why you must whip up a contract first before shaking those hands of your prospect clients and close a deal.
2. Not Doing Enough Research
Dealing with new projects may sometimes entail a lot of leg work. That means doing some research on your prospect clients. These background checks will help you know your client even before you personally meet them, especially in terms of their financial credibility.
Good thing securing a copy of business credit reports is more affordable now more than ever. With these reports, you can easily know if a client is worth transacting with. Once you’ve got your hands on these papers, look for these items:
- Fresh ASIC/Business Name Search
- ASIC current extract
- Summary of Partners/Directors business relationships
- Past Credit Enquiries on all Partners/Directors
- Adverse information on all of the Partners/Directors
- Default information on all of the Partners/Directors
- Bankruptcy details
- Insolvency details
3. Not Establishing a Debt Collection Strategy
If you want to stay in the business, you have to improve your cash flow. One way to do that is to collect all the payments efficiently.
Keep in mind that an effective debt collection can limit the financial risks of your company. That’s why a strategic debt collection is a must-have for your business. If you don’t have one yet, bring it up in your monthly meetings and find out how you will be able to collect payments from your clients.
This way, you’ll improve your cash flow and ultimately prevent financial losses.
3. Passing On Debt Collection Agencies
Like mentioned above, a debt collection is one of the key pieces in growing a business. There’s a reason why uncollected debts mean bad business. Not only will they impede your cash flow but also put you in a bad place, financially speaking.
If you don’t want this to happen to your company, seeking help from experts might be the best thing to do. Debt collection agencies like JMA Credit Control will take the load off you so you can focus on other things. They execute several strategies in collecting payments which have been proven effective in their years in the industry.
Hiring a trusted debt collection agency will help you improve your cash flow and will allow you to focus your energy and resources in growing your business or even starting a new one.
If you’re a small business owner who desires to expand the company someday, you’ll certainly need a hand when it comes to collection. Set up an appointment with JMA Credit Control and let them help you clear the outstanding debts of your clients!
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