Debt collection is a crucial aspect of many businesses. Debt can vary and includes monies owed for physical goods, services rendered, assorted business fees, or loans due. In business to business debt, the proper method of debt collection depends greatly on the reasons why the company in question still owes the debt. A company that commonly pays on time requires a different approach than one who simply refuses to pay.
What to do in this situation?
Unlike a company that is simply unwilling to pay, businesses undergoing financial hardships often wish to do so but do not have the financial means at the time. When collecting from a small business the following methods can help even in a tense situation.
- Remain Professional: above all when communicating with a business partner remain professional at all times. This not only makes the process run smoother but also avoids any possible legal concerns.
- Write Letters: written communication serves two purposes. One, it creates a paper record for the current collection claim and its associated value. Second, it lays out an explanation for the current debt, what is owed, and possible solutions.
- Phone Call Methodology: when calling keep calls brief and to the point. Be professional and to the point. Keeping calls professional also reduces the chance for personal offense and hurt feelings which can delay the collection process.
- Consider Settling: finally, in cases where a company is unlikely to recover from their financial hardships considering settling the debt for a lesser amount. This resolves the matter and also allows collection on some of the original debt in situations where the odds of full payment are extremely low.
How To Apply These Tips
When collecting from a company that is normally on time with payments being understanding can go a long way, especially if this is a long term business partner. Proper application of in house collection includes being firm, while not rushing matters unless the other side has shown an unwillingness to work with you. A common issue in debt collection is the lack of detailed records and associated tools, which makes the process more complex than it needs to be. Keeping track of interactions with the debted business will ensure that communication is always efficient and up to date.
Best Practices
Collecting from small business partners requires a different mentality than collecting from traditional customers. A small business is likely to owe more than a singular individual and there may be an existing business relationship to consider. By being professional, understanding, and only using the most extreme measure as a last resort the odds of a successful resolution are increased.
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