A great way to improve cash flow is to put in place a standard, streamline approach to pursuing and recovering bad debt. Yet, many small business owners neglect their past due accounts, letting them go for months, or years. Why isn’t bad debt recovery an essential can’t do without process for all businesses? Many reasons: some of them valid, others not so valid. It all comes down to focus, and making the process easy. Life anything in life, if you make the process simple and do it regularly, it becomes a habit.
Here are some bad debt recovery solutions you can use in your business, starting today!
1. Develop a strong collection letter. Just asking in writing for the mony owed to you will often get you results. Spend the time putting a template in place and you will use it again and again.
2. Designate and train key staff to make collection calls. Make it fun! Bring in pizza and do it on the same day every month (“Follow Up Friday”).
3. Select a debt recovery agency (also commonly known as a collection agency) to assist you.
4. Standardize your procedures for sending accounts to outside collection firm. Ask your collection agency to help you put together a “down and dirty” summary of the debt. If it is easy for you to submit accounts, you will do it more often.
Of course the best way to reduce your bad debt is to take steps before you give customers credit to minimize your risk. Use a customer contract to protect yourself.
Want more tips about how to reduce bad debt in your business? We have them!