How to Improve Your Cash Flow with Debt Collection..

 

Debt collection isn’t the most attractive task for business owners, but it’s necessary for keeping a healthy cash flow. Since the economic climate is so uncertain these days, anything that threatens the cash flow of your business needs to be dealt with swiftly and consistently, otherwise you’re at risk of defaulting on your own debts and bills. If you have a lot of outstanding debts, and your cash flow is struggling, then you need to call in those debts asap. If you’re not sure where to start, then read on for some tips.

Establish a Solid Debt Recovery Foundation

The first step to effectively collecting outstanding debts is to lay down a solid foundation for debt recovery and cash flow issues: a contract. The contract you make with your customers will specify how and when payment will be made to you. By signing it, the customer is agreeing to your Terms of Trade before you provide labour or goods to them. Have your solicitor help draw up a contract (or terms and conditions) for your business to ensure you have the right legal protection in case ever you have to start chasing up debts.

Develop a Recovery System (Procedure)

Implementing a system for debt collection is the best way to make the whole process easier for you. A good system will include a consistent grace period before the debt becomes due, and then a step-by-step plan of action once it’s overdue. For example, you might give your customers a month to pay their invoices. Once a month has passed, you might send them a reminder letter, or even call them to remind them of the debt. If they still don’t respond, then you should be ready with the next step, such as calling a debt collector or taking the issue to court.

These steps should be made clear to your customers from the start so that they understand how will proceed if you’re not paid on time.

Use a Collection Agency

After exhausting all internal efforts and the customer still won’t pay, then you may have to bring in a third party collection agency to pursue the account for you. Collection agencies are professionals in their field, meaning they’re aware of the rules and regulations surrounding debt collection, and can act on your behalf. This way, you won’t have to stress about getting your money or confronting the customer, as the collection agency will take care of it for you. Some also offer their services on a ‘no win no fee’ basis.

Legal Demand

Another avenue you can take if the debt remains unpaid is legal demand. Have your lawyer write up a letter of demand and send it off right away. In most cases, the customer will be willing to negotiate new payment terms with you. Of course, some will deny the letter or not respond at all, in which case you may need to take more formal legal action.

Some debt collection agencies (such as Debt Recovery Associates) are aligned with law firms and can offer legal (or letters of demand) as part of their ‘no win no fee’ service. They can also offer expert litigation at scale prices.

Collecting unpaid debts is a very stressful experience for most people. When it comes to protecting your cash flow, however, it’s extremely important that you follow up on the debts immediately and make sure you get what is owed to you.

Professional Debt Recovery for you …contact

Debt Recovery Associates. Persuasive, Persistence, Professionalism

Town Office-View Park Towers ,10th Fl ,Utalii Lane /
L584-off UN Avenue, Gigiri.

P O Box 27859 00100 Nairobi, Kenya

Tel +254-20-221 1382/362

Cell: +254 721 636 404

Fax +254-20-2211386

Email; debtrecovery@dolphinsgroup.co.ke

http://www.dolphinsgroup.co.ke/debtrecovery/index.php

 

Dolphins Group