Collection Services – Top Strategies To Reduce Bad Debt And Contain Delinquencies
credit to customers to drive sales and improve customer relationships. Though this strategy is successful in getting more business and retaining existing customers, it also creates the problem of bad debts. Bad debts are the receivables that have not been collected. Bad debts show unfavourably on a business account and severely affect the valuable cash flows. Recovering bad debts is not an easy or pleasant task, and it is advisable for businesses to take measures to avoid or at least minimize bad debt. This can be done by having a credit management system in place. Credit management strategies may include: * clearly stating terms and conditions in the credit contract * ensuring all credit transactions are documented and signed * maintaining records accurately * keeping track of due and overdue payments * checking the credit rating of debtors before extending credit * checking the credit rating of the debtor on a regular basis after giving credit * collecting a deposit from the customer before delivering goods or services * collecting portions of the payment as a project progresses * reminding customers of payments through phone, letters or visits In spite of having an efficient credit management strategy, it is still possible to incur bad debts. All businesses will have some percentage of customers who delay payments or even avoid them. Businesses have many options to deal with delinquent customers. Some of these are discussed below. Consultation Businesses can try to …
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