Finance

by Matthew Gill

Payment Agreements

Establishing effective payment agreements lies at the heart of the debt collection process. Whether it’s arranging a swift $100 payment within a week or structuring a six month arrangement to settle a $50,000 debt, debt collection can be the best solution for you. If you find yourself grappling with a debtor who is struggling to meet their financial obligations on a consistent and timely basis, turning to debt collection might be the optimal solution for several compelling reasons.

Negotiation

First and foremost, the debt collection process brings a structured and organized approach to the often challenging task of recovering outstanding payments. Debt collectors are adept at evaluating the financial circumstances of debtors, understanding their capacity to pay, and tailoring payment plans that align with both the debtor’s financial capabilities and the creditor’s need for resolution. This meticulous assessment ensures that the proposed agreements are realistic and achievable, increasing the likelihood of a successful agreement.

Time Savers

In addition to handling negotiations in an ethical manner, debt collection emerges as a reliable strategy to minimize the time spent on completing a job. Debt collectors not only possess the resources such as direct debit software, ensuring timely payments, but they also shoulder the responsibility of managing follow-ups and reminders that would typically demand the attention of creditors. By entrusting these tasks to debt collection professionals, creditors can significantly reduce the time and effort involved in overseeing the entire payment process. This delegation allows creditors to focus on their core responsibilities, while the debt collection agency efficiently manages the intricacies of ensuring prompt and consistent payments, resulting in a more streamlined and time-effective resolution.

Avoid Needless Legal Action

As debt collectors are seasoned with experience, they can see many different paths to recover your money including court. Court can be the wrong answer when dealing with debtors in financial hardship. After a potentially costly and timely process, the courts may only order the debtor to pay in a payment agreement meaningful to their situation. Debt collection can bypass this process to get the same result for so much less.

Security

Debt collectors also bring a level of expertise to the table that is crucial for navigating the legal and regulatory landscape surrounding debt recovery. With a deep understanding of the relevant laws and regulations, debt collectors can ensure that the payment agreements are not only effective but also tick compliance laws and protect you if an agreement goes south.

If you are having issues with a debtor not making regular instalments, please contact us to see how we can best save you time in your situation.

by Henley Recoveries

Avoid Using Debt Collection

Many businesses avoid using debt collection as they have no use for it. By our existence as a company, you can tell many others cannot avoid needing recovery services. How do they do it?

It may seem counter-intuitive for us to advise how to avoid using our services. However, your efforts to mitigate unpaid accounts relieves time and stress on your end and makes collection efforts more straight forward if needed.

Here are simple things you can do to your current system to mitigate debts in the future.

Prepare

To avoid using debt collection, you need to prepare for the journey your invoice may take. Just like a family outing where you need to bring hats, water bottles, food, a book for kid 1, spare change of clothes for kid 2 as they always get messy, GPS tracker for kid 3 as they always run off…..

There are so many things which could happen to your invoice. As the example above also shows, the more work you have, the more that can happen and the more prepared you may need to be.

This can look like changing your workflow from calls to confirmation in writing. Maybe your next step is written and signed contracts. What about having a scheduled process to follow invoices along their perilous journey…

Process

I am a simple guy, my brain works 1-2-3, cause and effect, what is the next step. We believe to avoid debt collection, your accounts should be similar. For example:

• Due Reminder
• Follow-up #1 X days overdue
• Follow-up #2 X days overdue
• Final Warnings X days overdue
• Action

Having a set template for follow-ups keeps the stress of figuring out how to get your payment away. Doing this keeps the pressure on your debtor and creates the urgency for payment to be made. We find creating an ethical sense of urgency and importance to a debt is one of the best ways to recover debts.

A process cannot be the be-all and end-all as a debt is not always cut-and-dried. Sometimes some finesse is needed.

Propose

So there’s more to your debt than meets the eye. Does your debtor dispute the invoice? In financial hardship? Ceasing communication? Making unfair demands? This may hurt, but sometimes you must swallow up your pride to resolve the situation, whether the principle is correct.

Although it may be difficult, proposing alternative ways to resolve the matter can be the final steps you can take to avoid using debt collection. This step really depends on how willing you are to settle for a lower amount or agreement.

As every situation is different, we can recommend is that all proposals is put in writing. If it’s a settlement, put forward a without prejudice offer to save on costs with 7 days to accept – that kind of thing.

Then what?

Worst case scenario, you are left with us, the collectors.

Thankfully, we are used to the situation never being the same and we are ready to deal with what you have to throw at us. If you are unsure if you have done all you can to chase up an unpaid invoice, give us a call. We will be happy to discuss if you have done everything you can to avoid using debt collection and what we can do to assist.

by Henley Recoveries

Better Accounts Equals Better Profit

A good business owner is always counting the cost of the work they do. For a builder, this is moving their margin when material costs rise (thanks COVID), for a mechanic, it is quoting for the time the job will likely take, for the accountant it is billing for the time spent working on the books. Despite this, time spent chasing up unpaid invoices isn’t always taken into account and it can really eat into your profit by taking you away from what you do best.  Whilst it is a necessary evil, we will let you in on a little secret, better accounts equals better profit. Here is why:

Time Wasted

It is easy to get caught up in perfecting your trade and leaving accounts to themselves. Unfortunately, we live in a world where reminders and follow-ups are needed to get things done.  Keeping on top of your invoices and payments, increasing your cash flow will also give you peace of mind, help you sleep at night.  That being said, every call, text, email, letter and meeting is a time where you could be either working, earning greater profits, living life or anything else that is not wasting your time and effort.

Despite all the time and money saving you are achieving in your work, the time wasted here can make a large debt in your earnings. 

Lack of Accountability

Forgetful clients are one thing, what about the evaders or fighters? Unfortunately they exist, many for very good reasons. Ensuring that they are aware that you are watching all your outstanding debt and incoming payments, makes them more likely to pay.  The squeaky wheel gets the grease, so to speak. Even so, following these clients up can be one of the more time consuming processes. Long term outstanding accounts can be the difference between a successful and stressful year.

An example we hear all to often is a small $2k invoice which has had hours upon hours of discussions, meetings and attempts to contact without payment. Unfortunately in some of these cases, the client had no reason to pay immediately as there was no real pressure to do so. Having the correct forms, contracts and plans for these clients is imperative to ensure you are paid.

Some ways to combat this are having the paper work and repercussions set up, like what we assist with in our free protection audit (shameless plug). Being able to legally on-charge admin fees, collection fees, interest and potential legal fees will allow you to be able to hand the matter to debt collectors without having to worry about more time and money wasted.

Lack of Process

So you are a smaller business. Family run? Sole Trader? You may not have or have needed a real process to your accounts management. What steps do you take to ensure you are paid? How can you get better accounts and also get better profit? Some important steps are:

• Credit check prior to engagement
• Quoted works in writing
• Consistent follow-ups for a set period of time
• Firm dates and firm repercussions as a result of prior written agreements

Lack of Time

Especially if you are a smaller business or maybe a larger one with too many invoices to chase up, there is not enough time in the day to recover everything. Most businesses will hire a bookkeeper for a few days a week to cover this. Well done, what a great first step! If you are unsure of what you could do next, our next shameless plug is our Accounts Receivable Process.

Let us handle your accounts for you. Guaranteed, consistent follow-ups, advice and ease of moving those harder cases straight to collection. Have a look at our page here for more info on what this looks like for you and if we can fill the gap in your business. We hope that we can give you a better accounts process so you can have a better profit.  Let us take on the stress of collecting your payments so you can continue doing what you do best.  Making money.