The right way to successfully collect business debt

The right way to successfully collect business debt

If you look at any business, big or small, you will realize that it is primarily a deal between two persons, one a lender who finances the whole idea and the other the perpetrator and executioner of the idea. Once a certain amount of money is given as debt, it is the responsibility of the person taking the loan to return the money along with some additional interests at a rate agreed upon by both the parties. The idea, planning and the execution of a business are essential but as important is the money involved in it. It would not go very far forward unless it has the necessary financial backing. Unfortunately, if you are a lender there are specific roadblocks that you may hit, people not paying back your money is a major one. When you lend out money, you should profile your customers very carefully. If there is an issue with the payback, it generally is of three types. Firstly, the customer tries to avoid paying money as much as possible by finding ways to escape. Secondly, the customer might have a huge debt on his head and tends to pay slowly and sporadically. Thirdly, the customer might genuinely not be able to pay up the money at that particular period due to some unforeseen events. The last two types of customers are manageable as they will pay eventually. It is the first type that you need to be worried about.

You may be boiling with anger inside, wanting to go to the house of the person and wrenching out the money, but there always has to be a better way of dealing with them, without losing your calm. This will go a long way in building your brand and showing the world the kind of personality you hold. Since this is an age-old problem, many ways have been devised to deal with this kind of problematic customers. A few of the tried and tested method which has proven to be successful has been mentioned in details in the following article.

Acting like a debt-collection company

There might be a possibility that the person whom you have lent your money might be someone known. This could be a reason that they are not taking the repaying of the debt very seriously, thinking that you are bound to cut them some slack. It will not help if you, like yourself, approach them for clearing your debt.

Instead, you should pose as a company responsible for collection all your debts from all your clients and tell them about the strict policies that you follow. Though this may not sound very professional, sometimes, going the crooked way and acting as a debt-collection company will inject the necessary seriousness in your client.

Maintain control but be flexible

The kind of relationship that you maintain with your client is of utmost importance here. It should not be such that your client takes you for granted and feels that they can give back the money according to their convenience. This also does not mean that you should pressurize your clients always to pay the debts on time.

An unfortunate event may befall anyone. Be flexible enough to understand the client’s reasons and make changes accordingly but also be in enough control so that they consider paying up sooner rather than later. You may suggest them to consolidate credit to clear your loans with priority. That fine balance is of utmost importance.

Seek legal advice and issue a complaint

In case you feel things are going completely out of hand, and you feel that your client is unnecessarily delaying the payment, giving the impression that they want to avoid it at all costs, it is time to take matters to court.

Consult your financial advisor and lawyer and file a complaint against your client. You should make sure you have maximum proof available to support your cause, and everything is properly documented from your side. This will help in leading the case to your favor.

Handling overdue payments

Sometimes, the overdue payments might become too big to handle. The client might almost be on the verge of going bankrupt, and it would seem like the end of the road for you too.

Negotiate cleverly and carefully and bring down your debt amount if required. Anything that you can salvage out of this debt would be a profit because you might have had reached the point of no return.

The tips mentioned above have been instrumental in saving the money of quite a few money lenders, and if you are going down the same lane, these may provide the handy escape route.

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