Recovering bad debts is tricky. You have to make proper arrangements to ensure you don’t miss time to collect payment from your debtor. Not only do you have to take care of documentation, but you also have to find tricks and techniques that work in your favor. During the payment settlement process, you may need to keep your cool as it’s about maintaining a long-term relationship with the other party.
Consider a scenario where you are working with a vendor for a long time. Recently, he/she starts to experience a cash crunch and cannot repay you. It can also happen that your debtor is avoiding payments to repay other parties first. Either way, you’ve to bear the loss. How will you make this situation better? Well, it’s wise to learn a few credit management techniques that help you settle payments with your payment defaulter.
Read on to know those credit management techniques and make sure you follow them to safeguard your business against fraud.
Make courtesy calls followed by emails
What’s the best way to remind your payment defaulters that they owe you money? Well, make them courtesy calls and remind them about late payments. Ask reasons, and if you think their concerns are genuine, you can allow them some time. However, if you feel you’re trapped in the debt game, you should follow the call with an email. This way, they would consider giving it a thought. It reflects your determination to recover your money.
Create strict credit terms
Dealing with a debtor is not always easy. Put time and effort into ensuring your money comes back to your business. So, if you think any of your defaulters have delayed payments for a long time, you can create strict payment terms for those parties. By doing so, you can exercise credit control and dictate business terms from thereon.
Send invoices
It’s the age of the Internet. Most businesses are leveraging digital offerings to flourish their businesses. Don’t lag and follow suit! Send previous invoices and last payment records to your payment defaulters rather than writing an email to remind them about payment. They may turn a deaf ear to your request. But if you send them their transactions, they may show interest in knowing how much they owe your business.
Seek help
Even after putting in efforts, if you think you can’t deal with a particular payment defaulter, you should approach a business credit management company like CreditQ. It helps businesses list their business credit defaulters and settle payments with them by intervening as a middleman.
So, if you’re feeling troubled financially due to the stuck money, you know the solution now.
Check business credit reports
If you’re thinking of forming a partnership with a new party, make sure to check references. Besides, review their company credit report to know about their payment habits, credit history, etc.
You should know that other businesses can also review your business credit report. It could be an investor or a lender who is considering working with you in the future. So, you should also pay your dues on time, keep your expenses to the minimum, follow good financial hygiene, and stay away from payment defaulters.
All this helps you build a good rapport in the market. Networking is crucial to business success. It can change the game altogether.