Debt collection

Debt collection is one of those horrible and potentially awkward things that nobody really enjoys doing. Unfortunately, when we don’t enjoy something we often procrastinate, putting off the task until a later time. I say unfortunately because you quite literally cannot afford to ignore debt collection.

Debt collection encompasses everything from the point that you take a customer on board, to the point at which they are no longer your customer. It involves being proactive, reactive, and keeping the customer happy even after they have paid the bill (but I’ll get to that later).

For the purposes of this blog, I’ll be talking purely about the reactionary steps you must take and options you have once you have an overdue invoice.

So obviously Debtor Daddy can help with the pre-reminders and post-due invoice emails (such as those in my previous blog). By linking in with your accounting software, you can set everything to automatically send out and then you don’t have to worry about it. However, this can really only go so far – maybe a customer supplied you with an incorrect email address, or they receive 100 emails a day and never check them. So what steps should you take?

We’re currently collecting survey data around why customers don’t pay their bills (take the survey here). When customers don’t pay, we are seeing trends where reasoning is:

• just under a third of people say their invoice shows incorrect items or amounts
• just over a quarter of people don’t pay because the invoice was sent to the wrong email or person

This is crazy – a far too large portion of customers who don’t pay due to avoidable problems. So it really is prudent to reach out to debtors if you find emails your emails aren’t having much effect.

But your next step is debt collection. The general consensus is that debt collection agencies are serious. And they are – but when people don’t pay your bills this is serious in itself. In Australia and New Zealand, a company to reach out to is Baycorp.

Baycorp offers a range of services such as:

• debt resolution; reaching out to customers who are in arrears
• legal services; litigation on behalf of clients
• field services; face-to-face meetings with defaulting clients
• purchasing your debt; invoice financing as described previously

Baycorp is limited to Australia and NZ, but there are still other options in Australasia and beyond.

Using an agency is always something worth considering, particularly considering your proximity to the situation (the client owes you money). However, an agency (as a third party), is removed from the situation and can make objective decisions regarding the best steps (and approaches) to take when getting you paid. And ultimately, they will have more experience with debt collection, which means likely get better results with a quicker turnaround.