A client recently gave us instructions to try to collect a debt of $75,000 where they had given up hope of recovery because the debt had been outstanding for over six months.  Although a contract agreement was signed there was no personal guarantee by the Directors to secure payment.  Our client was embarrassed that they had left the debt outstanding for such a long period of time. 

On receiving instructions to attempt recovery we wrote to the debtor company and secured full payment within only four days.  So don’t delay collecting what you are owed, but even if you have let things slip it may still be worth getting a debt collection professional involved to get your money back.

With a global financial crisis and a slowing economy, all New Zealand businesses should expect 2009 will be a different year to 2008.  So what can businesses in New Zealand do when facing such uncertainty.

In today’s business world, small business owners write off thousands of dollars of unpaid debts due to them.  Unfortunately, most of these write offs occur unnecessarily.  Whether for financial reasons or lack of understanding, small business owners simply do not pursue available collection methods for unpaid amounts they have a right to collect.  Don’t just write off a debt that is rightfully due and owing to you and your business.  There are many options available to you that may be successful in collecting money from an unwilling customer or client.  After exhausting all avenues available to you, persistence may just prove to pay off after all.

Here are three important key elements to think about in relation to your business: 

  1. There is less cash available in the economy.
  2. Demand for goods and services will be slow.
  3. Unemployment will rise.

If it is harder for banks to get money, it is harder for small businesses to borrow money.  That means that many clients that usually pay on time are likely to find it harder to continue doing so.  Your debtors could stretch out beyond 30 or ever 60 days and to combat this, your business must become diligent over the collection of your money.

Have terms of trade in writing and make sure all customers have a copy and be aware that it is worthwhile “screening” new customers to make sure they can pay.  Do not be a victim of those unreliable, late paying customers that often shop around for an easy target in hard times.

Just because the banks have less money to lend doesn’t’ mean that you should start being your customers’ bank.

For those that are over 30 days outstanding, make the time to call and ask for payment and to consider whether or not you should put the client on stop credit, especially if you cannot make contact with the client regarding payment of their account or if you believe the customer is deliberately being evasive, and while most of your customers will probably pay you promptly and without issue, you are sure to get your share of ratbags who drag payment for months, or worse, disappear without paying you at all.

We are committed to the success of our clients.  Our debt recovery team aim to provide a service that will enable you to free up your valuable time from the pursuit of payment so you can concentrate on the effective running of your business. 

So what specific rule of thumb can we give you on how to deal with debts when they start to go bad?  

  1. Don’t delay … and put the telephone to good use …letters and other written reminders are not as effective as the telephone in most cases in our experience.
  2. Once a debt goes past the 20th of the month do something about it. Telephone the customer immediately and if appropriate follow this up with a letter of demand detailing the amount and indicating a response is required within seven days after which you will start legal action.
  3. If there is no response, then place the matter in the hands of your debt collection professionals.