Getting capital to start a business is quite difficult. Therefore, it is really not fair to yourself if you have to close down your business because of customers who have not cleared their debts with you. Money runs businesses. As a matter of fact, money runs the world. The health of your business is measured depending on the profits that you are making through your transactions. When you have too many debts out there, your profits are definitely going to be slim. It is not healthy for your business if you have too many debtors who are not paying.
Luckily, this is why there are debt collectors. They make work for your business so much easier. They are the people you will send out there and they will collect debts from all those who owe you. It is their work to get in touch with your debtors to collect the money. The works of debt collectors are quite simple, but at the same time, very helpful to a business. If you have too many bad debts running around, these are the best people to get in touch with. They will help you recover that money from your customers.
You should always protect your business against bad debts, and there are many ways you can do this. Since bad debts are a risk nowadays, there are insurance covers against such. However, insurance might cost you more than the debts themselves will bring back. There are precautionary measures for you to observe. They include the likes of:
1. Comprehensive credit check
You should run an exhaustive credit check on each client to make sure that you understand their background. Are they people who are really worth giving credit or are they those who will just make your life difficult? With internet technology available, this should not be a problem at all. Read any debt review that is available online and it will tell you that doing a thorough credit check is always healthy for your business.
2. Director’s personal guarantees
Before you give a company credit, make sure that you get the personal guarantees from the directors that they are going to clear off the debts. This is a really good way to make sure that your money comes back to your business.
3. Insert terms and conditions
In your terms of trade, you should have a clause regarding the credit that you are giving. What are the terms and conditions regarding this particular credit that you are offering? Without terms and conditions, it is really difficult for legal action to take place as well. Therefore, your debtors should have read the terms and conditions and agreed to them.
4. Remind the debtors
Sometimes it is honest forgetfulness. It is not that the person does not want to pay off their debts, but rather the debt slips their mind. Always remind your debtors that they have some money they need to pay you but do so without sounding too overbearing. Make certain that you get feedback from them.