10 Tips for Successful Debt Recovery
Introduction
In this article we will give you 10 Tips for successful debt recovery in the UK. When your clients don't pay on time, it can leave you stressed and suffering cash flow problems that can grind your business to a halt.
Rather than letting this be the precedent, take a look at our top ten tips to ensure better debt recovery and quicker solutions than ever before!
Struggling with unpaid debts? Start recovering what's owed to you today.
Our 10 Tips for successful debt recovery
Check Each Applicant Thoroughly
The first thing that any lender should do before loaning money to a client is to complete thorough checks. From checking addresses, phone numbers and financial information to undertaking credit checks – there are a number of mechanisms that you can put in place to work out whether a client is a safe risk or not.
Armed with the results of your search, you should then consider the cut-off point at which you are happy to lend or not and stick to it. Many companies set their sights too low and end up with non-paying debtors when thorough checking could help you avoid the hassle in the first place.
Provide Clear Terms and Conditions
Every business should have clear terms and conditions in place for every client to access, and when you agree to loan someone capital, then you should ensure that you have a record of their agreement to the terms and conditions ready to use if the debt goes bad and you need to chase it.
Terms and conditions do not need to be overly complex, but they should set out exactly what you are prepared to offer, what you expect from the client and what will happen if either party fails to adhere to them.
Keep Accurate Records from the Start
One of the biggest issues in debt recovery is when a company is unable to show a clear paper trail of actions taken with regard to a non-paying client.
It is vital that every step is properly documented and copies of all communication are dated and logged in case you have to take things further down the line. By maintaining accurate records, your collection goals should be much easier to achieve.
Have a Clear Debt Recovery Plan
No matter how well prepared you are, there is always the possibility that a client will stop making repayments. In these cases, is it important that you have a clear debt recovery plan in place so that you can follow it in order to recover your money and agree on a repayment place with the client.
Any further action that you take legally will require you to show evidence of everything you tried in order to get the client to make the repayments, and a debt recovery plan that has been properly executed will help you to show this.
Be Proactive in Following Up on Debt
The longer you leave a bad debt, the harder it will be to recover, meaning that you should get to work on chasing it without delay. Many clients may miss a payment, but with supportive and proactive debt chasing, you are more likely to get the money you are owed.
It is also important to log every call and letter you send – especially if the client has multiple numbers on file. Regular calling is more likely to get a positive response, and an accurate call log is great for evidence when you have to take things further.
Add Interest and Additional Fees Fairly and Timely
As part of your lending agreement, you should stipulate your fees and interest charges for late and non-payments. Rather than avoiding adding these fees or being over-zealous with the amount you add on, make sure you stick to a fair and timely system.
Overcharging on fees will be seen negatively in the eyes of the courts, but if you fail to apply any fees or interest, then your debt chasing efforts will be an expensive process for you to afford.
Keep Lines of Communication Open
Research shows that the more open and approachable you are with your clients, the more likely you are to achieve a positive debt recovery outcome. In fact, there is evidence to show that the more hostile a company is with a client, the less chance they have of getting their full investment back.
Being friendly and supportive and considering affordability is an essential part of being a lender but be careful that you do not mistake being open and approachable with being lenient and lax in debt chasing.
Use Asset and Debtor Tracing Services
At Debttrace.co.uk, we provide a 24-hour tracing service to help you find your debtors and validate their addresses. Our search process is simple to sign up for and starts at just £19.99* with a full refund if we are unable to find your debtor.
The great thing about using a tracing agent service is that you can then use the information provided to prove that you have sent a communication to the right address and called the right number, stopping your client from being able to claim that they never received your notifications.
Follow the Legal Collection Route
If your efforts have not been fruitful, then you should move forward with legal proceedings against the client in order to recover the debt and fees owed to you. Be aware that this process is lengthy and will require you to complete your claim accurately for it to be heard by the relevant people.
Many companies lose out when it comes to legal proceedings because they failed to keep accurate records or submit copies of evidence when requesting legal intervention. Make sure that you have all your records copied and ready to submit with your claim for a smoother process.
Learn From Previous Clients
Our final tip is about taking stock of bad debt and working out what could have been done differently. Reflecting on lending criteria and collection processes is often a great way to understand where things went wrong and will help you to plug the gaps to reduce the chances of it happening again.
Of course, there will always be a risk associated with lending, but the more prepared you are and the better your procedures are, the easier you will find it to chase debt and achieve the outcome you want, even when your client tried to avoid repaying what they owe!
Contact DebtTrace Today
If you are ready to get some external people tracing support with tracing clients or debtors, then we are ready to help. Our tracing agents service is run 24/7 via our website and requires you to submit your details and pay the fee for us to get started. From locating current addresses to finding out about a debtor’s financial information, we have solutions to suit your needs. You simply pick the one you want to use and then input as much information as possible about your client and then let us get to work.
We search credit reference agency, open-source and proprietary data sets that you are unable to access to get up to date information that will help you, and with a 98% tracing success rate, we are confident that we will be able to help you.
Get started today and look forward to getting your debtors to pay what they owe.
Struggling with unpaid debts? Start recovering what's owed to you today.
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