most common b2b debt collection mistakes

7 Most Common B2B Debt Collection Mistakes

While running a business, collecting the past due payments from your business customers can be one of the most daunting aspects. Here’s a simple fact: It’s easy to make a mistake when engaging in debt collection for companies that aren’t specialized in debt recovery. In fact, the debt recovery industry is so mired in regulation that the likelihood of making a mistake is quite high.

If you are building your credit program, you may not be familiar with some common errors or mistakes that business owners make while collecting past due accounts.

Here is the list of some common mistakes that may encounter while collecting b2b debts from your customers.

1. Unaware Of The Expenses That Are Incurred In Debt Recovery

Before you focus on an initiative to recover your business client’s past due receivables, it is important to evaluate the costs that are imposed in debt recovery process and so, that you can know whether your collection efforts are going to be justified or not. During such circumstances, a collection agency will help you determine what those expenses are.

2. Harassing The Customer Unintentionally

There are several laws that companies need to obey while seeking to get back their client’s debt. Such rules prohibit a debtor from intimidating or harassing a customer while attempting to recover a debt. Excessively persistent or forceful demands may constitute harassment which is contrary to the rules on debt collection. These conduct sanctions include punitive damages, or even litigation. Before dealing with debt collection, you need to make sure that you are aware of the debt collection laws in your area to avoid such penalties.

3. No Credit Policy

In general very few businesses have a credit policy which holds a potential impact while recovery of debts. A credit policy identifies low, medium or high risk clients. This segmentation will help you set guidelines on credit limits and help organize collections. If you don’t have a good credit policy, you could end up extending credit without taking precautions to everyone. That can leave you with a lot of unpaid debt from past due invoices.

4. Outdated Client Records

Unlike outdated client records, updated client records allow you to detect the raise of potential debt issues. It allows you to take control of a debt issue, rather than the debt that controls your business. We all know about seemingly prosperous firms that just went bankrupt because they didn’t have enough cash to keep doing business. If you allow bad debtors to dominate your corporation, you’ll probably follow the same path. The most useful resource when it comes to managing a business is an actual client record. It will help you monitor customer behaviour and curb debt problems before they are going to happen.

5. Irregular Follow-ups

A clear follow-up strategy helps you get paid more quickly and avoid bad debts. Additionally, prompt collection of past due accounts will help you maintain a healthy cash flow. A good follow-up system includes getting in touch with debtors on time, setting credit limits, credit checks and implementing a good credit policy. Hence, following through on any past due balances is essential to increase your chances of debt recovery promptly and consistently.

Failing To Communicate On A Daily Basis

Lack of timely and regular communication with debtors will leave you with huge sums of unpaid debts. It’s important to always note that communication is a key to the relationship between debtor and creditor. Companies that use only one or two methods like sending emails and letters to reach a past due clients aren’t going to be reliably imaginative enough to get the job done. A telephone call is surely one of the best channels of communication, and it becomes even more difficult to ignore someone when they speak directly to you.

Waiting Too Long to Hire a Commercial B2B Debt Collection Agency

Most businesses are too patient when it comes to debt collection, and wait too long before contacting a commercial debt collection agency. The main reason behind this phenomenon is the fact that their account receivables do not set the payment deadlines. It is prudent to be rather impatient when it comes to debt collection. Waiting longer to employ a debt collection agency to recover your past debts is one of the most common mistakes that companies make when they try to collect past debts.

It can be challenging to receive payments on time. When trying to recover your past due debts, one of the best things to do for your company is to hire a commercial b2b collection agency as soon as your client is already 90 days late in paying your invoice. At Kenstone Capital, We help you cultivate and retain positive working relationships with your customers by providing our clients with non-contentious solutions through our amicable debt collection services. We specialize in helping businesses to collect their past due receivables. Call or email us for a free consultation and get a free price quote!

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