Debt Recovery Priority for Small Business
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Cashflow is vital to any business. We have said it before in previous articles (and we will say it again!). In this article we are going to focus upon Debt Recovery within a business and what action you can take during these crucial times. |
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Whether you are a small business owner or a self employed individual you may find yourself trying to track down payment from a customer who has an outstanding invoice.
All outstanding invoices over 30 days have an immediate impact on your monthly cashflow. It is important at this stage to communicate regularly until the matter is resolved.
If the invoice is outstanding for 60 days then it should be treated as a debt. At this point a good deal of contact should have been made making the customer well aware of the debt. Debt recovery services (or debt collection services) can be a very effective solution. Debt recovery agencies recover nearly £5billion every year in the UK.
Statistically, 90% of debt recovery cases are resolved with a legal letter that carefully encourages the customer to comply without reducing the chance of doing future business. The reality may be that you may not wish to do any further business with this person or company however there are many cases where business can be continued with a more strict payment plan put in place, for example, 50% payment up front or a Direct Debit facility.
Ensure new customers are aware of your credit terms so that there is no confusion from the start.
The main priority for your small business will be obtaining new customers however cashflow can also be improved by ensuring your bookkeeping and organisation for chasing debts is in order.
If you are thinking about using a debt recovery agent then talk to TaxAssist Accountants today on 0800 0523 555 or complete our contact form and we will help you make a difference to your cashflow.
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