Collect that Debt - Your Business Depends on it

The efficiency of debt collection is the difference between a business that will succeed and a business that closes up.

If you do not have control of your debt collection then you will eventually fail. All businesses that grant credit will be faced with the problem of bad debt at some stage. The best way to deal with bad debt is to have a good debt control system in place.

There are three types of bad debt:

  • Can pay.
    This is where your debtor can pay but will drag out non-payment as long as possible. They do intend to pay but only at the last moment.

  • Can't pay.
    This type of debtor have no means of paying the debt either momentarily or ever. They are not necessarily avoiding payment but do not have the means to do so.

  • Won't pay.
    This type of debtor is the worst. They will try to get away with not paying, know the debt collection routine and will not pay until the matter goes either to court or through a debt collection agency.

    • The solution to this is to get your money when it falls due or have a collection procedure that does not let your debtors get away with anything. Once you stop chasing the money that is due to you the amount owing to you will increase. The longer you allow a debt to remain unpaid, the less chance you have of recovering it.

    There are three ways to collect debt:

  • By yourself.
    This is the least costly method and involves phoning the debtor, sending letters and as a last resort, going to court to have the debt paid.

  • By a lawyer.
    This involves having your lawyer send letters of demand before it is taken further. A fee will be charged dependent on how long it takes for the debt to be recovered. If going to court is involved and your debtor is forced to pay you through a court order your legal fees could be recovered. However if not, then you will have to cover the court costs as well.

  • Debt collection agencies.
    These are firms such as Baycorp, who specialise in the collection of debts. A percentage of the amount collected is taken as a fee. If the debtor does not pay the debt it will usually affect their personal credit rating.


    • Copyright 2005 StartRunGrow
    http://www.startrungrow.com

    StartRunGrow (http://www.startrungrow.com) is a global online information organization that specializes in creating, developing and marketing business help information specifically with the aim of "making business easier" for entrepreneurs around the world. The StartRunGrow objective is to become a dominant player in the business help arena providing end to end solutions for the millions of small and medium businesses worldwide who continue to struggle daily with the difficulties of starting, running and growing a successful business.

    In The News:

    pen paper and inkwell


    cat break through


    Web Based CRM Systems: Get Mobile; Get Results

    Everyday more web based companies enter the business scene. The... Read More

    Increase Sales in Your Home Business With These 10 Simple Ideas

    Every home business has the same problem of how to... Read More

    Wichita Kansas is a Great Place to Run a Business

    We love Wichita because it has great all round weather... Read More

    More Business Card Marketing

    If you are worried about how many different business cards... Read More

    Franchises Must Meet Legal Definition to be an Actual Franchise

    All franchises must meet the legal definition of a franchise... Read More

    Administration Of Your Small Business

    You've been meaning to tend to the administration part of... Read More

    Pressure Washing Business Case Study, Tractor Cleaning

    So often small service businesses fail to exploit niches, which... Read More

    How Most Business Owners Sabotage Their Success

    Owning a business is a challenging endeavor. If you're like... Read More

    How to Start an Office Support Service

    Office support services can range from basic data entry to... Read More

    Increase Your Profits with a Point of Sale (POS) System

    Whether you operate a chain of restaurants, a mom-and-pop convenience... Read More

    Top Ten Resolves for Building Your Business in 2005

    1. Resolve to build a consistent network system.Since referrals are... Read More

    Small Business Ideas - Your Image Can Lose You Business

    What image do you and your people portray to your... Read More

    Recognizing Employees? Contributions Can Go a Long Way

    Every employee would like to earn as high a salary... Read More

    The Triple A Way to Spark Your Companys Profits

    Winning small and home based businesses today must continually shake... Read More

    Starting a New Business in a Small Town

    Q. I am a former pastor who left the ministry... Read More

    There Are No Dumb Business Questions, Not!

    Q: I'm curious. What is the dumbest business question you've... Read More

    Are You a Small Business Lone Ranger? Take My 10-Question Quiz To Find Out!

    So what exactly is a "Small Business Lone Ranger?" A... Read More

    Real World Accounting for Small Business Owners

    If you're like me, you love accounting. It's so fascinating... Read More

    Avoiding the Small Business Cash Flow Roller Coaster

    A solopreneur I know disappears from my radar screen for... Read More

    10 Hiring Tips for Small Business Owners

    As a successful small business owner,you're accustomed to long hours;... Read More

    Practical Money-Saving Tips For Small Businesses

    One of the primary concerns all small businesses have is... Read More

    Buying a Franchise

    Buying a franchise is not for everyone. This guide will... Read More

    Aircraft Washing Service Operations Manual

    Anyone who is serious about washing aircraft as a full... Read More

    How To Get Slightly Famous in Print

    Early in my career, I wrote an article for a... Read More

    Entrepreneurs and Franchisors Watch Out

    New Franchisors and Entrepreneurs need to watch out as they... Read More

    10 Filler Activities for the Summer Business Slowdown

    Summer is a time for the outdoors, for that well-deserved... Read More

    Is Your Success Predetermined?

    Your on-line success is based on your efforts and yours... Read More

    SBIR vs STTR

    SBIR vs. STTR: If you are participating in the SBIR... Read More

    Covenants Not To Compete: Another Franchise Quandary

    Imagine that you have operated a successful franchise business for... Read More

    Australian Workplace Agreements - How They Work For You

    The employer / employee relations environment has been constantly evolving... Read More

    You Are Invited

    Business card size works well for invitations to special events.What... Read More

    Why Does a Business Fail and What Can You Do to Stop It?

    I believe the number one reason why a business will... Read More

    Understanding Franchise Releationships in a Franchised Business

    Now that you have invested your time, energy and money... Read More