You should have a good plan when collecting your debts. Start by sending invoices the moment a transaction is done. This increases the likelihood that the customer will pay you early. Breakdown all the contents of the transaction and ensure everything is accurate. This is very helpful when recovering factoring debt.
Statements should be forwards to the debtor if he or she fails to make payment on the agreed dates. This is a document which communicates the amount you owe the person and the date you were supposed to get the money. This is meant to encourage the person to make the payment. Another option is sending a letter to remind the person the amount he or she is supposed to pay you and the date the repayments were supposed to be done. Be polite in your letter.
If they do not respond, call them. Remind them of the debts and listen to what they have to say. In addition, any subsequent actions to be taken if the money is not remitted should be disclosed. Follow the telephone conversation with a letter outlining all that has been discussed during the call.
If the above means do not bear fruits, you should send the final letter reminding them of the debt and the actions to be taken if the money is not send to you promptly. It is tiresome to drag debtors to court to seek repayment but remember the law is on your side. However, seek legal counsel first before going to court.
Courts can be approached as a last result. You need to demonstrate to the judges that you have tried your best in arguing the person to pay you. Remember that you will get nothing even if you win the lawsuit if the court determines that you never tried to engage the debtor in repaying you.
To prevent encounters with bad debtors, evaluate the credibility of a person before giving them goods on credit. Also, be strict to those who take long to make the repayments if they come back requesting that you extend credit to them. To avoid high bad debts, limit the amount you give out in credit terms. To encourage people pay on time, you can decide to give financial incentives.
Write down the names of the bad debtors and do not extend credit to them. Remember that invoices cannot be used to pin the customer down in law courts because you write them after the deal has already been closed.
The stop list has to be updated regularly. The customers listed therein will have to pay in cash if they come to buy goods or services from your business company.
Statements should be forwards to the debtor if he or she fails to make payment on the agreed dates. This is a document which communicates the amount you owe the person and the date you were supposed to get the money. This is meant to encourage the person to make the payment. Another option is sending a letter to remind the person the amount he or she is supposed to pay you and the date the repayments were supposed to be done. Be polite in your letter.
If they do not respond, call them. Remind them of the debts and listen to what they have to say. In addition, any subsequent actions to be taken if the money is not remitted should be disclosed. Follow the telephone conversation with a letter outlining all that has been discussed during the call.
If the above means do not bear fruits, you should send the final letter reminding them of the debt and the actions to be taken if the money is not send to you promptly. It is tiresome to drag debtors to court to seek repayment but remember the law is on your side. However, seek legal counsel first before going to court.
Courts can be approached as a last result. You need to demonstrate to the judges that you have tried your best in arguing the person to pay you. Remember that you will get nothing even if you win the lawsuit if the court determines that you never tried to engage the debtor in repaying you.
To prevent encounters with bad debtors, evaluate the credibility of a person before giving them goods on credit. Also, be strict to those who take long to make the repayments if they come back requesting that you extend credit to them. To avoid high bad debts, limit the amount you give out in credit terms. To encourage people pay on time, you can decide to give financial incentives.
Write down the names of the bad debtors and do not extend credit to them. Remember that invoices cannot be used to pin the customer down in law courts because you write them after the deal has already been closed.
The stop list has to be updated regularly. The customers listed therein will have to pay in cash if they come to buy goods or services from your business company.
About the Author:
Connor G. Schiffman has 27 years of experience in commercial lending including factoring, asset based lending, and banking. Connor helps readers manuver through all the account receivable options providing practical and useful knowledge to better understand all your lending options. If you want to learn more about Purchase Order Funding he recommends you check out www.receivablefactoring.net.
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