In every kind of business, bad debt should be minimum for better profitability. Debt is the most crucial part of small business owners. Such businesses are already passing through a financial crunch and more losses lead to businesses shutting. Every business should take measures to prevent bad debts.
Prevent Bad Debts
Business work on commitment and trust. Always do business with those whom you trust. Especially credit based business should be done carefully. Let’s check out important points to prevent bad debt.
1. Before doing business with the company. Always do the proper background check and ensure the company should not in the liquidation stage.
2. In product-based businesses, there is an inflow and outflow of goods. In this case, there are two ways of doing business. First, one is to send the goods to the customers only when he is done with the full advance payment or partial advance payment. The next set of goods will be dispatched only when the previous payment is credited to your account.
3. Don’t delay in generating the due payment invoices. This creates pressure on the customers to clear the dues as soon as possible.
4. Discount offer should be run to encourage timely payment like cash discount offers.
5. Credit limits should be fixed to avoid bad debt issues.
How to Recover Outstanding Debt?
Whatever the reason may be for the debt not being recovered. One should keep on reminding their customers to clear the outstanding debt. Steps to recover outstanding debt.
1. Always review the contract and check the due date to send a reminder to the customers to clear the dues.
2. Send a written reminder to the customer to request payment clearance.
3. Keeps on sending reminders to the customers regarding payment clearance.
4. Hiring a debt collector agent can be the option to recover outstanding debt.
5. If all efforts go in vain, Going for legal action is the last option left with you.
What Action Should Be Taken, if Customer Refused to Pay the Debt
Before moving further and taking legal action with the help of debt recovery lawyers Perth. The company should do a background check to ensure the capability of the customer to pay the debt. If the customer is passing through and financial crunch and does not hold the capability to pay the debt. In this case, going for legal action is ethically or morally wrong.
Take Legal Help
There are various legal authorities present in the market.
Small Business Commissioner
These regulatory bodies are appointed to protect the interest of small businesses to go into a financial crunch.
Community Legal Centers
This regulatory body is formed to help small businesses in filling the court form, letter writing assistance, etc.
Legal Aid Commissions
There are various serious legal actions that can’t be taken himself because of the high cost involved with it. This legal aid commission will help you.
Debt Collection Agencies
Debt collection agencies are the best option to recover debt. These agencies charge to fix a percentage of the money recovered.
