Advice for Engaging with Debtors

Advice for engaging with debtors

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Chasing payments is an incredibly frustrating process, especially if your business doesn’t have a dedicated credit control team. We have reported before on the direct link between commercial debt recovery and the impact this has on business owners’ mental health. It can be an exhausting, stressful task that is tempting to put off if you feel like you are not making any headway. Here we provide some helpful advice for engaging with debtors and identify the warning signs to look out for which will signpost when it might be necessary to get help with your commercial debt collection.

Preparation is key:

Before engaging with a debtor, preparing for the call will help you to have the upper hand throughout the conversation. Make sure that you are up to date on the latest communication that took place and get yourself up to speed on the latest outstanding amount as this will change if you are adding interest to your overdue invoices. Check through your terms and conditions of sale and payment terms to ensure that you have the correct information at hand, this can be particularly useful if you have variable terms for different clients. Make sure you know how many days the invoice is overdue, you know what has previously been agreed (if this is not the first time you have engaged with your debtor) and you have their file at hand in case you need to cross-reference anything during your conversation. It can also be very helpful to discover who is the right point of contact within the organisation responsible for processing your invoice.

Handling the Discussion:

As we mentioned before, chasing payments can be a stressful and frustrating process, but it is important to remember that how you handle the discussion can influence your chances of success. Taking a firm but understanding approach with debtors is usually the most helpful way to open discussions, particularly if the person you are dealing with is not ultimately responsible for making payments. They may be doing their best to get your invoice paid but being blocked themselves, so it is important to be appreciative of their efforts. If the business is facing financial difficulty then being sympathetic can help you to resolve the situation as they are likely to be under a lot of pressure themselves.

It is important to keep on top of your credit control practices, the sooner you contact a debtor after their invoice has become overdue, the earlier you can begin to put the wheels in motion to reach a solution. It shows that you are in control and not prepared to be taken advantage of. Lax internal practices can lead to bad habits with your clients if they think they can stretch your payments terms each time they receive an invoice.

Offer solutions:

When it becomes apparent that your debtor is unable to pay your invoice in full or they’re coming up with excuses, you need to be prepared with solutions. If they can’t find the invoice then send them a copy there and then and ask them to confirm receipt of the invoice, if their invoice is the same amount each month then you could consider a direct debit or standing order. You might be tempted to offer a payment plan, but this should be carefully managed. We have more advice on that here. But it is important to assess the situation, offer appropriate solutions and continually monitor the client to ensure that they are sticking to what has been agreed.

What next?:

If, after trying to handle the situation internally, you are still unable to resolve the issue then it is now a good time to look at employing an external debt collection agency that will be able to escalate the situation on your behalf. It will enable you to focus on running your business and signals to your customer that you are taking this seriously. Sometimes you will find that just simply handing the case over to a commercial debt recovery agency will trigger the client to clear their invoice, but if this doesn’t happen then we are able to utilise various methods of recovery, including legal letters and court action to recover the monies owed to your business.

Contact our experienced team today to find out how we can help you to improve your credit control practices and reduce the debts owed to your business.

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