The 5-Step Debt Recovery Plan (#Cashflow) Tip 25

Initiating Debt Recovery

debt recovery

Day 25 of 31 Days – How to Improve Your Business Cashflow by Ezypay

There are several methods of handling debt recovery, but it is the wisest to select the method that allows you to recover the money owed while still also maintaining the relationship with your client.

Talk to Them

Seek out your errant client via email, phone or face-to-face. One should chase overdue invoices immediately and contact your client directly by phone or email the day after you are notified about the overdue invoice.

Letter of Demand

Draft and send out a letter of demand, which is a written request to settle the debt.  This gives your client the opportunity to pay the debt without spending the time and money associated with legal proceedings. Keep a copy of the letter of demand you send the client as it may be required as evidence that you tried to recover the debt if you proceed with legal action.

Agency for Debt Recovery

If you must seek out a debt collector, do ensure that it is licensed under the Debt Collectors Licensing Act 1964 (WA).  To find a reputable debt collector, refer to the Yellow Pages or the Institute of Mercantile Agents Ltd that represents collectors, investigators, process servers and repossession agents throughout Australia.

Take Legal Action

An alternative to the debt collection agency would be to press charges against your errant customer. Be prepared to follow through with any warning about legal action in your letter of demand and take note that legal proceedings may become complex and expensive.

Make someone responsible for debt recovery

Rowan Brown, Director of Recovery Partners suggests, “Debt recovery needs to be a priority in your business. If you (as the owner) are too busy to do this yourself then you need to make someone else responsible for it. And make sure they know that it is their priority!”

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