If you are wondering what can really affect your otherwise profitable business, then you must know that all the overdue and unpaid debts can fatally wound your business. This wound can be more disastrous in the cases of small businesses. If you are a small business owner and already have many overdue invoices on your table, you surely know how it is taking a toll on your business accounts as well as your peace of mind. So, before it turns into a huge financial loss, it is better if you try to collect the money from the market and strengthen your business.
In the case of debt collection, often many small business owners commit some common mistakes which further worsen the situation for them. Since it is your hard earned money, you cannot afford to make the mistakes that will not only force you to forget about the money but also, tarnish the reputation of your business house or may even lead you to a complicated legal entanglement. So, here, we have put together the mistakes you must avoid as a small business owner for debt collection. Take a look.
Lack of Research and Information
Before you decide to deal with any individual or a business, you must make sure that you are doing enough research on their credit history, as well as collecting as much relevant information as possible. If you are wondering what the credit report will contain, then you must look for these following details:
- ASIC Current Extract
- Fresh ASIC/Business Name Search
- Adverse Information on all of the Partners/Directors
- Default Information on all of the Partners/Directors
- Past Credit Enquiries on all Partners/Directors
- Summary of Partners/Directors business relationships
- Insolvency Details
- Bankruptcy Details
When it comes to other relevant information, you must ask for:
- Full name of the business owner and the name of the partners
- Permanent business location
- Multiple phone numbers
- License information
Lack of Managing Receivable Properties
Being a business owner, you might find it really difficult to manage the receivable properties since it involves too much of your time in maintaining details. If you have more pressing priorities to take care of, it is better to hire a professional debt collection agency that will take care of it perfectly. However, in many cases, business owners ignore to hire a professional until it is too late.
Not Having Paper Trail
If you are not hiring a professional firm for your debt collection, it is obvious that you won’t know the necessity of documenting every single step that you are taking for the recovery. Hence, make sure that you are maintaining a paper trail.
From the initiation of the recovery process to every mail and notification, you need to document every single detail. If the situation demands, you might have to move to the court as well. Hence, it is better that you think of keeping the papers ready.
Not Hiring an Agency
Often, business owners avoid hiring a collection agency service for this purpose because they are afraid of ruining their business relationship. However, by doing so, they are committing a huge mistake. Why? It’s because in most of the cases, the lender refuses to pay the money back to the owner. But if the agency gets involved in the matter, the lender is more likely to pay the debt because their reports can affect the lender’s credit score which might further decrease his chances to get more loans from the market. Also, in the cases where the lender changes the city or location without any prior information, the agency can successfully track them down and recover the money. This is not possible for you since you have limited access to various networks.
Not Hiring the Right Agency
While hiring the business collection agency, you must make sure that you are hiring the right people. Instead of their own claims, do a bit of research on your own about their history and reputation. Check the online reviews so that you know that the money collection is in safe hands.
So, now as you know about these mistakes, keep them in mind and avoid them diligently in the case of recovering the unpaid debt from the market.