Top Strategies for Businesses to Improve Debt Recovery

There is no denying the financial strain that poor paying customers can place on a business, especially SMEs that rely on a steady stream of income for stability and future growth.  Fortunately, there are several effective strategies that businesses can implement to improve their debt recovery processes, whilst maintaining positive customer relations.

Clear Communication

First and foremost, it is important to promote open dialogue with your customers from the outset.  Before entering into a credit agreement with a new or returning customer, you should clearly communicate your terms of business and ensure that the customer has understood them.  People lead busy lives and can sometimes be forgetful – this is all part of being human.  We would highly recommend, therefore, that you send regular payment reminders, either via email, letter or text message, as this will serve as a useful reminder to the customer to make their next payment on time.

Account monitoring

It is important to take a tailored approach to debt recovery, as this is key to effectively managing your debtors.  By monitoring a customer’s payment history, current account status, and overall relationship quality, you can decide upon the best approach to take.  Whilst a sympathetic approach may be best for occasional late payers, a more assertive approach may be needed when dealing with chronic late payers. 

No matter how well you think you know a customer, it is always best to be one step ahead and account monitoring should therefore form part of your company’s credit control policy.

Offer Flexible payment plans

There is no “one-size-fits-all” solution when it comes to debt recovery.  In today’s climate, with the cost of living currently at an all-time high, a customer may fall into financial difficulty through no fault of their own.

If a customer informs you that they are experiencing financial difficulty, you can significantly improve your recovery rates if you are flexible and understanding of the customer’s situation.  By agreeing a new payment plan, changing the payment frequency or reducing the instalment amount, you will move things in a positive direction.

Automatic payment reminders

Many businesses use digital accountancy software that can be set up to send automatic payment reminders.  If this functionality is available to you, then you should most certainly make use of it.

build and sustain strong relationships

If you have a positive relationship with a customer, they are far more likely to be open with you and engage with you in a positive manner, should a problem arise. Debt recovery can be an uncomfortable topic of discussion, but if you have invested the time and effort into building and sustaining a strong relationship with your customer, then you are far more likely to reach an agreeable resolution.

refer to a debt collection agency

When all else fails and you feel you have reached a state of stalemate with your customer, it may be time to call upon the services of a professional debt collection agency.  Debt recovery can be both frustrating and stressful, not to mention, time-consuming.

By referring your bad debtors to a debt collection agency, like Jackson CRS, you can focus your time and energy on the many other aspects of running a successful business. 

Contact Us

If you would like to put your business in good stead for the future, then please give us a on call 01603 319034 or email: info@jacksonscrs.co.uk for a free no obligation chat about your needs and how we can help.