It is absolutely crucial for all enterprises to manage their receivables effectively; however, due to certain situations, clients or customers sometimes fail to pay what they owe in a timely manner. This can put a strain on the relationship because one party subjects another to a compromising position; everything from the business’s day-to-day operations to its expansion plans will definitely feel the impact of the negative cash flow caused by the debt.
The issue with debt collection is that it’s very tricky to implement. While it’s an upright way of upholding a business, a rigid implementation often scares away clients or customers. According to industry experts, though, there are ways a business can manage receivables and customers’ debts without angering, pressuring or losing customers.
One way of going about this is by determining a customer’s capacity to uphold financial obligations – it’s a good preventive practice. If the client already has a bad credit record or a history of payment delinquency, perhaps it’s better for the business to demand upfront payment.
Now, for customers who are going through a financially challenging time and have accrued debt but are committed to honoring their financial responsibility, a business can actually provide a debt recovery system for such people. There are financial support organizations that can assist businesses that wish to help their clients to get out of debt; they offer various payment schemes that take into consideration the payment capacity of these people who are struggling financially.
Another is through credit control, which is basically a dialogue initiated with customers which utilizes different means of communication to inform these customers of payment requirements and be reminded of the financial responsibility they need to meet. This takes out all the awkwardness that usually occurs at personal meetings to discuss payment conditions; a third party is normally hired to handle credit control, so it’s like automating the process of reminding customers of what they need to do as well as the consequences if they are not able to deliver on their promise. Overall, this system is very straight to the point – it’s all business, so the “emotional” factor easily becomes a non-issue. With this provision, a business helps its clients avoid building up debt.
The last one is through consultation; this is a solid strategy as well. A business can benefit from presenting itself as an ally instead of an angry nemesis to the customers. Through a consultation, both parties can come up with a more favorable agreement regarding payments. Sometimes, if the customer also has a business, an alternative payment can be agreed upon; free products or services take the place of monetary payment.
About the Author:
Sarah Miller is a business consultant by profession and a content creator, writer and blogger by passion. Having been exposed to the different aspects and faces of businesses, she frequently does research on useful information regarding the different methods and techniques to further improve business marketing and sales performance. She shares her interests in business management through blog/content writing. She shares that services such as that of http://www.tpscreditcontrol.co.nz enables businesses to conveniently collect debt.