Debt collection takes place when creditors and collectors seek to secure payment from consumers or businesses who are legally bound to pay or to repay money they owe. It is important that any organisation involved in recovering debt is aware of its legal obligations.
Debt Recovery helps you increase your cash flow by recovering overdue customer payments.
Here are some basic steps to follow:
1. A friendly payment reminder
Once the payment is overdue phone, email or mail the customer with a courtesy reminder. The customer may have simply forgotten.
2. An overdue payment reminder
If the payment remains outstanding and the customer has missed the next agreed payment date, or there has been no contact, phone the customer or send another email or letter reminder.
3. Send a Final Notice
When the customer has not paid as per the terms of payment, and has missed any extended payment dates call or email them to discuss the outstanding invoice and request payment.
4. Try to make direct contact with your customer
If there is still no payment or response consider visiting the customer in person to ask for payment. This sometimes helps create a personal relationship with the customer that could be useful for future payments.
5. Send a formal letter of demand
In the event that all attempts to contact them have failed, consider sending a letter of demand. This should be only done as a last resort, as it can damage your relationship with the customer.
If you still haven’t been paid, then may consider using a debt collecting agency to collect the outstanding money from your customer. It is useful to check a list of fair debt collection practices, developed by Consumer Affairs so you know the boundaries of debt collection.
It is a good practice to clearly outline at the beginning of a customer relationship your expected terms of trade and payment.