Numerous businesses struggle with cash flow issues every year.
Unfortunately for many, this struggle often results from either
their own poor debt recovery strategies, or a lack of procedures to
ensure cash does not slip through business fingers!
So how can you turn this around and minimise loss and maximise
Here are the five top tips from our experienced team at CG
1. Confirm the Contract:
While a verbal contract is legally enforceable, ensuring you
have the contract in writing before you spend your valuable time
and resources is the way to go. Having terms in place from the
outset means you can clearly set out what you are being asked to do
and your expectation as to how and when you will be paid. This
avoids the possibility of it becoming a contest of 'he
said', 'she said' down the track.
2. Know your customer:
While this seems like a fairly obvious statement, you would be
surprised at the confusion that can arise concerning the person or
entity that has legally engaged you. Often customers are asked to
complete credit applications or order forms, but if these are not
checked to ensure they are completed accurately and the information
verified through simple searches (e.g. a free search of ASIC's
records), they are of limited value.
3. Retain proof:
If you ever need to sue to recover a debt, the facts that you
are able to prove in court may be the difference between winning
and losing. So, keep copies of all basic documentation such as the
signed contract, emails confirming the job to be done and authority
from the customer to proceed, order forms, signed delivery dockets,
admission of the debt owing and so on.
4. Establish a debt recovery
Have a system that follows up on unpaid invoices. Being
assertive and following up payment early in the process allows you
to maintain momentum and credibility. Ask yourself, what systems do
I have in place at the moment to keep track of unpaid invoices,
send out reminder / demand letters, or address any disputes
At some point, look at outsourcing the recovery of your debts.
This point will often be reached when you have received no response
to your own demands and need to 'step it up a notch'. Often
a letter of demand from a solicitor may be all that is required to
get your customer "talking" to you and be more inclined
to either deal with a dispute or make an arrangement to pay.
Ultimately, if legal action is required to be taken, it can be
handled more effectively and efficiently in the hands of a
At CG Collect, Coleman Greig's dedicated debt recovery and
collection team, we are happy to assist and provide you with
guidance in all aspects of credit management and recovery. Our aim
is to explain the process in plain English and work with you to
maximise your debt recovery potential.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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