Debt – Get Your Money Back and Keep the Business Going
Tuesday, August 9, 2016, 6:00 AM | Leave Comment
The fact that someone owes you money can be an awkward experience on its own, especially if that someone is a close friend.
In the business world, however, things are even more complicated; your debtor may be a valued customer, who cannot seem to make ends meet at the moment.
However, having your debtors delay their payment can lead you into a cash flow crisis of your own, and this is something not to be taken lightly.
Reasons People Tend to Avoid Collecting Debts
Quite simply, these reasons fall under two common categories: you either find the act of demanding your money back unpleasant, or believe that your debtors are bound to pay you, sooner or later.
Well, demanding your money back is unpleasant – in fact, other than earning your wages, everything involving money tends to be awkward and unpleasant.
Ways to Collect Debts and Preserve Your Business Relationships
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Remind your debtors
This way of collecting your debt is more of a thing that goes without saying. Although sending letters and reminders to those who owe you may be efficient for those customers who intend to pay, and usually pay on time, but were delayed for some reason or another, this won’t strike a chord with customers who are habitual late payers.
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Phone call
Phone calls tend to be more personal than letters and reminders, but feel more awkward. However, keep in mind that you should transcend and rise above the feeling of awkwardness when doing business, anyway.
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Pay them a visit
This tactic is usually quite efficient. An effective way of collecting debt, paying your debtor a personal visit will make them feel uncomfortable for being late for payment and they will probably make a strong mental note that they are to pay off their debt as soon as possible.
Furthermore, paying your debtor a visit will give you more feel around when or if you can expect your money back – are they trustful, welcoming and apologetic; are they avoiding you, are they avoiding eye contact?
Make sure that you remain straightforward and realistic during the conversation.
Although chances are you won’t be able to get your entire debt on the spot, get the feel around how much you can expect for now.
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Debt collectors
This should not be your first choice – if you hire a debt collector to pay a visit to the debtor who usually isn’t late on their payment, this will generate a negative impact on your business relationship.
However, if your debtor doesn’t seem likely to pay you anytime soon, opting for professional debt recovery is more than advisable. Use debt collection agencies only if someone is known to be late for debt payment – sit down and make a list!
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Money Isn’t the Only Currency
Although having your debtors pay you on time is the most professional and generally the cleanest way of tackling debt, there are ways in which you can benefit from your debtors, without getting your money back instantly.
If your debtor is a service provider, ask them to do it for you, free of charge, until you’ve gotten your money back. This might seem inconvenient, but those who owe money are more than eager to do you a solid, on account of feeling guilty.
If your debtor distributes products, sit down and negotiate an amount of their product that will cover their debt to you.
This is a convenient way to keep everyone happy – you get a free product/service and they get to delay their debt payment.
We’ve all owed money to someone and the feeling is more than inconvenient. However, without asking for your rightful amount of money, you are risking of falling into a cash flow crisis, yourself. Find a way that is most suitable to get your money back.
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