How to tighten the debt control process

on Monday, 04 December 2017.

With Brexit looming, we do not need to tell you what potential this would have for financial instability across a wide variety of sectors. It is the general consensus that the British exit could have financial complications such as a loss of investment and trade opportunities.

An article from the New York Times stated it this way:

"Without access to the union's open markets, Britain would probably lose trade and investment. And while the influx of migrant workers has created anxiety over British culture and identity, losing that labor force could lead to lower productivity, slower economic growth, and decreased job opportunities."

So how does a business prepare for Brexit and the impending financial problems that come with it? The key for survival lies in getting a handle on your debt control process. If you have never thought much about the importance of tightening your debt control process or if you are unsure on how this is done, you have come to the right place. Let's take a look at some key ways that you can tighten your debt control process.

Setting Your Payment Terms

One key way that you can tighten your debt control process and ultimately protect yourself is by being smart about how you set your payment terms. This is a way to ensure that your customer's debts are always paid promptly and will help you with your cash flow. One measure you can take when it comes to setting payment terms is to offer discounts to customers who pay within 30 days. This will help ensure prompt payments and protect your business.

Not only does it help to inspire on time payments, it also is a good idea to have certain repercussions for missed or late payments. Be specific about when interest will be charged for a late payment and be sure to enforce it. Also, be sure that there is a signed agreement on any payment terms. Without this, your terms are meaningless and not enforceable. Make sure you set good payment terms but be smart about it. Make sure that you have the necessary legal backing so that your business is protected in the long run.

Implement Preventative Systems

The key to avoiding bad debts is to have good preventative measures in place. Some measures you can take to be sure that payments are received is to be prompt in sending out invoices and statements. It can also help to keep current records of your customers' debts and be sure to also communicate with your customers when a payment is missed. Don't let late or missed payments go unnoticed. Sometimes it can even be a simple solution like a misplaced invoice. Don't worry about feeling like you are pestering your clients. The ultimate goal is to protect your business and your assets and you can't be doing this if you are not pursuing every means possible to get your money.

Don't Be Afraid of Sticking to Your Terms

If a customer is consistently missing their payments or exceeding their credit limit, don't be afraid of sticking to your terms and stopping service to said customer. You may lose customers over this or it might just be the thing you need to inspire customers to keep their accounts settled. Either way you will be protecting your business which is the ultimate goal.

Don't be Afraid of Using a Debt Collector

If worse comes to worse, don't be afraid of using a debt collector. The hope is that sticking to the steps above will prevent the need for this but in the worst case scenario, you will always have the law on your side. Be smart and avoid this last ditch effort if possible but at the end of the day, do what you must to protect yourself and protect your livelihood.

Be Careful Who You Do Business With

One important factor when it comes to getting control of your debt control process is to be careful who you are doing business with. A bad debt can be very harmful to your company and as such you want to make sure you are getting into business with people who will be able to pay off their debts to you. So how do you know that the person you are going into business with is worth your time? This can be done by simply running a business credit report on the company in question. This will help you get a detailed look into the company you are about to deal with and help you know the credit status of your prospective business relationship beforehand. A business credit report company such as APART-DATA can help you with this. APART-DATA provides you with the following data with their company credit reports:

  • Company Credit Rating & Limit
  • Ltd & Plc Data
  • Partnerships & Sole Trader Data
  • Up to 5 Years Financials
  • Director & Ownership Info
  • CCJ Data
  • Directors and shareholder data
  • Company mortgages info
  • Full registered company details
  • Monitoring (with email alerts)
  • Get online 24/7 (including weekends and bank holidays)
  • PDF download

It is a good idea to run a credit report on a company beforehand because it helps you look out for any warning signs such as key staff members leaving, a tendency to give late or partial payments, or a rapid increase in purchasing frequency or volume. Knowing this information from the start will help you protect yourself and ultimately tighten your debt control process.

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In addition to business credit checks we provide a wide range of business services including business to business data cleansing and a wide range of other business services.