Believe it or not, a debt-collection system that your company adheres to can make or break your business. Especially if you own a small enterprise. Proper debt collection generates income and small business cash flow for your company that, if not done correctly, can impede the financial growth of your business.
That’s why delayed and unpaid payments by your clients or customers are the things that you don’t want to happen in your business. It can cause a domino effect that can hurt your company’s financial state pretty badly.
While uncollected debts are ultimately the client’s fault, because they’re the ones who chose not to pay, small business owners are partly to blame. Whether you admit it or not, there are grave mistakes that you may have made even before the project started, or some time along the way, that factor into debt situations.
If you’re a small business owner, below are only some of these mistakes that you definitely should avoid doing:
1. Not Putting Everything On Paper
No, we’re not talking about your notes or scribbles of the meeting. We mean the actual contracts that must be in place and agreed upon before striking a deal.
Starting with a project with just verbal agreements and handshakes is probably the biggest mistake that a business owner can make. And it can affect a company’s future negatively.
Keep in mind that it’s not a done deal unless you’ve signed a contract that’s been read and examined by both parties. This way, both parties are aware and are reminded of their obligations during a project. In fact, you can use several MA strategies negotiate deal to optimize your deals.
Believe us, even your long-time friend in business or long-time clients will eventually fail to pay their dues for various reasons. That’s why signing a contract is the best way to protect your business.
So before shaking hands with a client, make sure that you’ve whipped up and signed a contract first.
2. Not Knowing Your Potential Clients Well Enough
Smart business owners always do their research first before engaging with any potential clients. They try to acquire basic information and business and personal credit reports about their potential business partners. This way, they will know firsthand whether they are reliable in terms of paying contractual obligations.
This may seem like a lot of legwork, but trust us, researching a lot about your client will save you and your company a lot of trouble. Researching will allow you to judge whether a client will give you a ton of headaches or not.
Fortunately, acquiring credit reports about your clients is much easier and more affordable nowadays. And these reports can give you details like bankruptcy details and insolvency details.
Once you’ve acquired these papers, look for common red flags and decide from there.
3. Mishandling The Receivables
There will come a time that your company will have more clients than you can handle. And having more clients means more receivables. When that time comes, your hands will be too full to manage all the invoice papers. And there’s a great chance that you’ll mishandle these receivables unknowingly because of the workload.
Before that happens, you should hire someone to handle all the receivables from different accounts. And you could just oversee the task if you can’t afford to hire a whole team.
This way, you can focus on growing and managing your business while keeping the company’s cash flow steady.
4. Dismissing The Idea Of A Debt Collection System
It’s 2021 already. It’s about time that you establish a proper system for collecting payments from your clients and customers. A steady and fool-proof debt collection system can improve your company’s cash flow significantly.
With a proper system in place, you can eliminate all the hassles and risks that come with collections. For example, you can leverage bank lockbox advantages payment processing. You’ll have full financial control to manage your business and grow it in the next few years.
5. Not Hiring Debt Collection Experts
Admit it or not, small businesses are more prone to financial losses compared to larger companies. That’s why every small enterprise must have a fool-proof debt collection system in place. This is to make sure that the cash flow of the company is maintained.
If proper debt collection is unchartered territory for you, keep in mind that it’s okay to ask for help. Hiring a debt collection agency in Brisbane could be one of the best moves that you can do for your company.
Professional debt collectors can help you set up a proper debt collection system in place so you can save a lot of time and recover a ton of money from delinquent accounts.
They will also serve as your representatives when it’s time to collect payments from your clients and customers. They know the ins and outs of debt collection so don’t have to worry. Your accounts are in good hands.